Reserve Bank of India Governor D. Subbarao said here on Thursday that some depreciation of the rupee along with an assessment of the oil import bill had been factored into the inflation projection of 7 per cent made for March 2012. Revision, if any, would be done in the mid-quarterly review due on December 16, he said.

Dr. Subbarao was briefing the press after a meeting of the RBI's board of governors. Later, he also chaired a meeting of the sub-committee of the Financial Stability Development Council (FSDC) which reviewed the recent developments in the global macro economic and financial sector scenario, focussing on the issues relating to potential systemic risks for India.Mr. Subbarao said at the press meet that there had been a 14 per cent depreciation in the value of the rupee since August and it certainly had inflationary pressures.

He said that this was the result of developments outside the country, especially Europe.

To questions on the state of West Bengal's finances, Dr. Subbarao said that the State should raise taxes and compress expense but must also pay attention to the quality of fiscal adjustment so that desirable expenditure was protected.

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