other hand, oil prices materialized slightly above the assumptions ( chart 20 ). in line with the average futures prices in the first three weeks of october, the average assumption for 2013, which was set as usd 107 in july, was revised upwards to usd 109. this revision added 0. 1 percentage points to the end - 2013 inflation forecast. we preserved our assumption for the annual rate of increase in food prices as 7 percent. in other words, it was assumed that the recent unfavorable course of unprocessed food prices would be temporary. before moving on to forecasts, i will talk about our assumptions regarding public finance. medium - term projections are based on the assumption that no additional tax adjustments will be introduced to tobacco and energy products the rest of the year. meanwhile, we assumed other tax adjustments and administered prices would be consistent with the inflation targets and automatic pricing mechanisms. thus, there has been no change in the end - 2013 inflation forecast stemming from the fiscal policy. regarding the fiscal policy stance, recently - revised mtp projections are taken as given. accordingly, we assumed that fiscal discipline would be preserved and the ratio of primary expenditures to gdp would gradually decline starting next year. 3. inflation and the monetary policy outlook now, i would like to present our inflation and output gap forecasts based on the outlook i have described so far. medium - term forecasts perceive an outlook where a gradual increase in the predictability of the monetary policy is continued. in addition, we envisage that the cautious stance of the monetary policy is preserved and the liquidity policy remains tight and the annual growth rate of credit will fall to 15 percent reference value by mid - 2014 owing also to recent macroprudential measures. accordingly, inflation is expected to be, with 70 percent probability, between 6. 3 percent and 7. 3 percent ( with a mid - point of 6. 8 percent ) at end - 2013 and between 3. 8 percent and 6. 8 percent ( with a mid - point of 5. 3 percent ) at end - 2014 ( chart 21 ). as a result, we revised inflation forecasts for 2013 and 2014 upwards by 0. 6 and 0. 3 percentage points, respectively, in the inter - reporting period. 0. 4 percentage points of the revision in 2013 was led by exchange rate developments, while 0. 1 percentage points stemmed from the rise in average oil price assumption. moreover, the output gap forecast, which was revised upwards owing to the better

gross settlement ( rtgs ), electronic trading platform ( negotiated dealing systems – order matching ) ( nds - om ) and a separate central counter party ( ccp ) in the clearing corporation of india ltd ( ccil ) for guaranteed settlement are among the steps that were taken by the reserve bank over the years towards this end. the system makes g - sec trading practically risk free and efficient. 21. the system of primary dealers ( pds ) was established to provide support to the market borrowing programs of the government and also to impart liquidity in the secondary markets. subsequent to the withdrawal of the reserve bank of india from the primary market, as mandated by fiscal responsibility and budget management act 2003, the pd system has been underwriting the entire government of india market borrowing. 22. to meet the diverse funding and hedging needs of the participants, there is need for a wide array of instruments and products which would also offer benefits of diversification in the portfolio. over the years, several instruments like zero - coupon bonds, capital - indexed bis central bankers ’ speeches bonds, floating rate bonds, separate trading of registered interest and principal of securities ( strips ), bonds with call and put options, cash management bills, inflation indexed bonds have been introduced after wide consultations with market participants. plain vanilla fixed coupon bonds, however, remain the mainstay of issuances. 23. reserve bank has always focused on improving liquidity in the debt markets. reserve bank has constituted a working group ( chairman : shri. r gandhi ) to examine ways to improve liquidity in government securities and interest rate derivatives market which made several recommendations including suggestions for consolidation of debt. many of the working group recommendations are being implemented. the recommendations, such as, truncating the time window for bidding in the primary auction ; changing the settlement cycle of primary auctions in treasury bills ( t - bills ) from t + 2 to t + 1 ; conduct of primary auctions in g - sec as a mix of both uniform - price and multiple price formats ; re - issuances of existing securities in state development loans ; and migration of secondary market reporting of otc trades in g - sec ( outright and repo ) from pdo - nds to nds - om and croms, respectively, have been implemented. work is in progress with regard to recommendations on consolidation of public debt. 24. as a result of the dms, all sustainability indicators, viz., level of debt