A boost up in NRI deposit rates is likely as presidential candidate Pranab Mukherjee is expected to take some policy decisions before signing off as Union Finance Minister. Though he did not spell out what kind of policy initiatives were on the agenda that could improve the slowdown, senior finance ministry officials said "tough measures" could include decisions such as announcing partial decontrol in diesel, opening foreign direct investment (FDI) in multibrand retail and announcing the government's intent to rollout other pending reforms.

The Finance Minister is set to resign on June 26 and file his nomination for president on June 28. On Saturday, he said that he had spoken to the RBI governor and the finance secretary and certain corrective measures would be taken. The depreciation of the rupee against the dollar is something that the government needs to fix on an urgent basis as the rupee has lost more than 25% against the dollar in the last one year. Some announcement by the central bank by increasing interest rate on foreign currency deposits by non-resident Indians and issue of short-term bonds for NRIs could help the government stem its further slide.

Saddled with depleting foreign reserves and flat industrial production, the government is desperate to start rolling out its stalled reforms agenda in the beginning of the fiscal so that the benefits accrue in 2012-13. Top priority of the government is to check the subsidy bill and contain the fiscal deficit within the target of 5.1% of GDP. Raising of petrol prices in May, aligning it with the international crude prices, was an effort in this direction. Now that international crude prices have moderated, the government may consider raising diesel prices marginally in the next few months and is likely to go in for partial decontrol.