Y V Reddy: The growing influence of the emerging world
Speech by Dr Y V Reddy, Governor of the Reserve Bank of India, at the 2007 Money & Banking
Conference "Monetary Policy Under Uncertainty", hosted by the Central Bank of Argentina, Buenos
Aires, 4 June 2007.
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Mr. Chairman, Governor Redrado, Chairman Ignatiev and distinguished participants,
I am honoured by the kind invitation of Governor Redrado to visit Argentina and participate in the
Annual Money and Banking Seminar at the Central Bank of Argentina with focus on "monetary policy
under uncertainty". I must compliment Governor Martin Redrado for assembling a galaxy of central
bank Governors, leading market analysts and globally renowned academics. The assemblage is a
tribute to the charm, popularity, knowledge and wisdom of Governor Redrado. I want to thank all the
officials of the Central Bank of Argentina for the warm hospitality and excellent arrangements made.
My presentation is broadly in two parts. In the first part, I address certain general issues relating to the
EMEs covering (i) the growing importance of the EMEs in the global context; (ii) distinguishing features
of both convergence and divergence, in these economies; and (iii) some current concerns of the
EMEs. I devote the second part to discuss India's development and reform experience.
I. The growing importance of the Emerging Market Economies (EMEs)
A group of economies having some distinct market features was reportedly perceived and termed as
"emerging markets" in 1981 by Antoine W. van Agtmael of the International Finance Corporation, the
affiliate of the World Bank. Broadly, an EME is described as an economy with low-to-middle per capita
income levels, characterised as transitional, i.e., in the process of moving from a closed to an
openmarket economy and embarking on an economic reform program that leads it to a stronger and more
competitive economic performance, and simultaneously, to higher levels of transparency and
efficiency in the functioning of the factor markets, including the financial markets. More generally, it
can be held that what is and what is not an "emerging market" depends on the maturity of its
institutions, that is, the rules of the economic market game - the law and the culture - and the
institutions enforcing adherence to these rules (Kolodko, 2003). From an operational point of view, the
EMEs may be considered to be the fast-growing economies, gradually transiting from the developing
to the developed status. In the view of market-participants, the EMEs are the countries that are
restructuring their economies towards greater market orientation and thus, offering a wealth of
opportunities in trade, technology transfers and investment.
While the fast-growing economies are operationally grouped together as emerging market economies
(EMEs), the group of countries constituting EMEs has not been clearly defined and hence, a
discussion about the EMEs as a group, at times, becomes difficult. Nevertheless, the major countries
amongst the EMEs are very well-recognised and an increased focus has been placed upon monitoring
the performance and market conditions of the EMEs by the international financial institutions, leading
economic intelligence agencies, credit rating agencies, leading multinational securities firms and
financial journals. Academic and policy research on EMEs have also mushroomed, focusing
particularly upon the monetary, financial and regulatory policies and the issues relating to trade,
financial integration and liberalisation of capital accounts.
The EMEs represent the fast-growing group of countries and their share in world output is increasing.
They are geographically spread across the world encompassing diverse cultures - Asia, Middle East,
Europe, Africa and Latin America. On account of increasing trade flows, intra-EMEs as well as with the
rest of the world, they play a critical role in determining the course of bilateral, regional and multilateral
trade policies and developments. They have become the destinations for large movements of
international private capital, attracted by high-return possibilities, dwarfing the official flows, including
those from multilateral financial institutions.
Today, the EMEs as a group are reported to constitute about 80 per cent of the global population,
representing about 20 per cent of the world's output. The share of the EMEs in the global GDP is
increasing and is also a tribute to their sound macroeconomic policies, improving fiscal positions,
stronger external sectors, increasing productivity, etc. According to some recent estimates, the EMEs
will soon account for more than half of the world's PPP-based GDP.
The EMEs are also becoming crucial to the supply-demand dynamics of oil and food apart from
services and manufacturing products, as also for improving environmental cooperation.
The rise of the EMEs, in general, has thus, made the globalisation a two-way process in which the
emerging economies are changing from passive recipients to being part of active participants in global
economy.
It is useful to recognise that some of the EMEs are becoming hubs of regional economic activity with
sizeable populations, large resource bases, and huge markets. Their economic success is considered
to have positive externalities for the neighboring countries and spurs their development process.
From the perspective of public policy, managing the transition of the EMEs to the mature market
economies is a challenging task. Compared to the transition-path traversed by the currently
industrialised economies, the policy-makers in the EMEs face several pressures - in terms of
compressed time frame for transition, technological compulsions towards more openness, the
sociopolitical pressures, etc.
It is useful to note that implicit in the word "emerging" in the very title given to the EMEs as a group, is
the notion that they are undergoing a rapid change or transition. We must recognise that the transition
embraces demographics, political institutions, social dimensions and related attitudes. These
allencompassing changes have an in-built potential for uncertainties, possibly some volatility, but it gets
exacerbated by the international capital flows, particularly when the changes in such flows happen to
be unrelated to domestic fundamentals. In such a situation, managing the transition turns out to be a
critical challenge for policy-making, and the management requires a more difficult and dynamic
tradeoff between commitment and flexibility in policy. In fact, several unprecedented policy initiatives
amongst many EMEs in the recent months in managing capital flows should be viewed in the context
of the compulsions of dynamic trade-off between commitment and flexibility of policies in the external
sector of the EMEs.
II. Some distinguishing features of the EMEs
The emerging markets and developing economies grew by 5.8 per cent during the past ten years as
against 2.7 per cent growth in the advanced economies. This phenomenon is currently lending
credence to the argument that growth in the emerging countries can perhaps help, to some extent,
offset an economic slowdown in the US.
Second, in recent years, the inflation environment in the EMEs remained benign despite a significant
rise in commodity prices. Average inflation in the EMEs has declined dramatically since the early
1990s, in many cases from double- and triple-digit levels, to about five per cent at present. This
decline in inflation in the EMEs, now sustained for more than half a decade, is impressive.
Third, the EMEs have grown faster than the advanced economies in terms of volume of trade as well.
Thus, the volume of exports from the emerging and developing economies had grown at an average
rate of 8.9 per cent during 1998-2006 as against 5.5 per cent growth in the advanced economies.
Fourth, the EMEs attract significant capital flows. The net inflows of foreign private capital to the EMEs
reached a level of US$ 256 billion in 2006. Foreign-investor demand for emerging market assets is
reflected in a broad-based rise in inflows into dedicated bond and equity markets of the EMEs.
Emerging-market corporate bond issuance in international bond markets rose to a record level of US$
125 billion in 2006.
Fifth, as a result of persistently rising capital flows, foreign exchange reserves of the EMEs have
increased significantly. Consequently, seven of the EMEs hold more than double the foreign exchange
reserves of the G-7 group and account for 43.7 per cent of the global foreign exchange reserves, while
the G-7 group of countries account for 21.1 per cent of the total. Similarly, while seven of the EMEs'
foreign exchange reserves amount to about 38 per cent of their aggregate GDP, reserves held by the
G-7 group are four per cent of their total GDP.
Sixth, along with the accretion of foreign exchange reserves from exports and capital account, most,
though not all, of the EMEs also have high savings rates, which are further increasing steadily in many
Asian and other emerging market economies. In these countries, savings are rising faster than
investment.
Seventh, the considerable surge in market financing has been buttressed by substantial efforts to
modernise the financial sector, enabling the EMEs to offer investors an increasingly wide and
sophisticated range of financial instruments and, thus, to attract new types of investors. Overall, the
EMEs are tending to put in place financial structures similar to those in the advanced countries.
Although the EMEs as a group have these common characteristics, they are also quite distinct from
each other in certain respects. The overall improvement in the fundamentals of the EMEs masks a
significant dispersion in most of the benchmark indicators, viz., GDP growth, inflation, balance of
payments, foreign currency reserves and public finances. Therefore, let me now enumerate some of
the divergent features of the EMEs.
First, some of the countries are growing at a robust pace while growth in some others has been
relatively slower in some of the recent years. Similarly, sources of growth are quite dissimilar across
the EMEs.
Second, as reflected in the export-GDP ratio, external demand has been a more dominant driver of
growth in recent years for some of the EMEs while some of the EMEs seem to be more
domesticdemand-driven economies.
Third, there is a divergence in the external sector performance of the EMEs, as reflected in
parameters like current account balances, level of external debt, etc. The EMEs including China,
Indonesia, Malaysia and Russia have been maintaining current account surpluses since 1998 while
some others have maintained current account deficits. External debt reductions have been particularly
significant in Indonesia, Russia, Brazil, and also in Argentina following the 2005 debt exchange.
Fourth, the EMEs have a wide variety of exchange rate arrangements. Such diversity is only expected
in view of the wide differences amongst these countries in economic and financial circumstances.
However, as these countries have adapted to the expanding opportunities arising from deeper
involvement in an increasingly integrated global economy and to the changes in their own economic
environments, there has been a gradual movement towards greater flexibility in some of them.
Fifth, there are variations in terms of economic endowments such as rich natural resources and
human capital.
Sixth, institution building plays an important role in sustained development. Since the major EMEs
have adopted the path of reforms at different points in time under different historical circumstances,
their institutional strengths vary. For example, both China and Russia are transiting from a
centrallyplanned economy to a more open-market economy but their approach to reforms has been different
and, thus, the level of institutional strength also differs. A contrasting level of institutional development
is also evident from the fact that while some of the emerging markets witnessed financial crises in the
1990s, some others, like China and India, could avoid the contagion effect.
Seventh, another contrast within the group of the EMEs is that not all of them are equally exposed to
similar shocks. For instance, if we look at oil trade of the EMEs, some of them are net exporters of oil
and are benefiting from oil price spikes, while some others are net importers of oil. Hence, the EMEs,
which are oil-importing consumers, face greater energy-security concerns in financing their long-term
growth, while others are relatively better off to tackle the growing energy needs.
The EMEs exhibit very diverse characteristics to investors, whether in terms of country size, the size of
financial markets, energy dependence, the level of forex reserves and, more generally,
macroeconomic performance, Thus, not all the EMEs are equally impacted by the ongoing
developments in the global economy and investors appear to differentiate between them. The
advantage of such diversity is that the possibility of any synchronised behaviour or a potential for
contagion amongst the EMEs is to some extent moderated. However, Governor Draghi of Bank of Italy
explained in his address earlier today that there are new financial intermediaries, new financial
instruments and new dispersed risks. Hence, the risk of contagion to the EMEs, through the financial
markets, which appear to be even more integrated now, seems to have heightened, and the real
sector in the EMEs might not remain immune to its consequences.
III. Current concerns of the EMEs
In the emerging market economies, growth has continued to be firm on account of adoption of sound
macro policies and structural reforms. These were complemented by global factors such as strong
commodity prices and abundant global liquidity. Concerns have, however, arisen regarding the
sustainability of some of these factors. High investment growth, excessive lending, overhang of
liquidity, strengthening retail demand and imbalances in trade and international payments are some of
the factors causing concern in some of the EMEs.
In addition, there are a number of downside risks emanating from the behaviour of oil prices, adverse
developments in the US housing market, persistence of global imbalances, large leveraged positions
in financial markets and possible emergence of inflationary pressures. It is important to recognise the
risk of an abrupt and disorderly adjustment of global payments imbalances. The exposure of emerging
markets to risky financial assets of the mature markets has increased, and therefore, the overall global
financial risks have increased. In the event of loss of or moderation in the risk appetite and the
consequent unwinding of leveraged positions, there could be serious adverse impact on the emerging
markets.
Global equity markets are also getting integrated irrespective of the stage of development of the
markets. Volatility in international financial markets has increased in recent months with deterioration
in the sub-prime segment of the US mortgage market in early 2007. Concerns over the systemic
implications of hedge-fund failures and the wide diffusion of risks through derivative markets have also
increased in recent years. Consequently, monitoring of risks has become much more complex than
before. There are, therefore, serious concerns that financial markets/investors may be assigning
insufficient weight to the downside risks.
The integration of the EMEs into the global markets has resulted in a wider diversity of financial
institutions operating in the EMEs and a broader range of business strategies. With financial
institutions in the advanced economies increasingly searching for profit opportunities at the customer
and product level, foreign direct investment from the financial sector provides a route for accessing the
EMEs, which offer attractive strategic business opportunities to expand. The growing involvement of
foreign firms in the financial systems of the EMEs has given rise to certain concerns.
Finally, the recent rise in agriculture prices could potentially represent the beginning of a structural
increase in prices. Impressive growth performance and consequent increase in food-demand of large
populations, particularly in India and China, on an unprecedented scale in a short time span,
generates huge demand pressures on food items, including edible oil. The growing demand for animal
proteins could further accentuate the demand for agricultural products. The supply-side is also
affected by diversion of corn and oil-seeds to produce bio-fuel as energy-substitute; mandated by law
in some countries. The tendencies towards global-warming are adding to uncertainties on the supply
side. The resultant mismatch between supply and demand could potentially have impact on prices of
food articles. The consequent impact on inflation-perceptions and hence, on inflation expectations
could be disproportionately large, perhaps even in the industrialised economies. At the same time,
there are several challenges to public policy in managing the problem of food prices.
First, there are invariably strong domestic political-economy considerations in managing
foodproduction and ensuring food security.
Second, the increasing global financialisation of commodities evident now could help, but it could also
potentially add to volatility - since in recent years, there has been a growing presence of financial
investors in the markets for commodities-based financial instruments.
Third, the weight of food items in price indices is large in many EMEs and hence, it would pose
dilemmas for monetary management.
Fourth, in such a situation, in any comparison of inflation between the EMEs and the industrialised
economies, some of the EMEs might emerge worse off, owing to higher weight for food items in their
price indices.
Finally, those EMEs, which are coping with second order effects of recent oil-price increases, may find
any possible shock on food prices, somewhat burdensome. In case, adverse developments on this
account occur and happen at a time when global liquidity is withdrawn or risk-premia increase sharply,
there could be policy dilemmas for the EMEs, even after accounting for upside risks, both in terms of
efficiency and resilience.
It is, however, gratifying to note that in India, the government has taken measures for immediate
supply-side management of food items, which should mitigate, to an extent, the concerns in this
regard. The National Development Council, the highest policy-making body in India, met last week and
finalised a vigourous programme for enhancing production and productivity in Agriculture.
IV. India: development and reform experience
India is the second most populous country, but is amongst those which have the youngest
demographic profile in the world. The "demographic dividend" is expected to extend over the next few
decades of this millennium. India is unique in pluralism in terms of languages, religions, ideologies and
traditions spread over twenty-eight provinces and seven federally governed union territories, each with
its distinct identity and socio-cultural ethos. The Constitution of India recognises 22 languages as the
official languages. India is well endowed with natural resources, human resources and varied climatic
regions. The institutional architecture is unique with flexible federalism, democracy with universal adult
suffrage, and coexistence of public and private sector.
Growth
The average growth rate of the Indian economy over a period of 25 years since 1980-81 has been
about 6.0 per cent - a significant improvement over the annual growth rate of 3.5 per cent over the
previous three decades from 1950-51 to 1979-80. In the more recent period, the Indian economy has
entered a high-growth phase with the growth rate averaging 8.6 per cent in the last four years and
over nine per cent per annum during the last two years. The growth rate is expected to be about 8.5
per cent for 2007-08.
Over the years, while the GDP growth has accelerated, the population growth rate has moderated,
giving a sharp impetus to the growth in per capita income. Since the 1990s, per capita income has
been growing at an average rate of around 4.0 per cent, implying that a person's income will double in
nearly 18 years. A person with a life expectancy of, say, 72 years could thus see his income doubling
at least three times in his adult life. If the current GDP growth rate of around 9 per cent is maintained,
a person can hope to see the standard of living multiplying by almost five times in his lifetime.
The industrial sector constituted 19.6 per cent of GDP in 2006-07. Indian industry has emerged from a
period of restructuring and organisational change during 1996-2003. In the subsequent years, there is
a growing realisation of productivity and efficiency gains and is increasingly becoming internationally
competitive.
The main driver of the Indian economy currently is the services sector, which constitutes 61.9 per cent
of GDP in 2006-07 and contributed two-thirds of average real GDP growth for the period 2002-07.
The strengthening of economic activity has been supported by persistent increase in domestic
investment rate from 22.9 per cent of GDP in 2001-02 to 33.8 per cent 2005-06 coupled with an
efficient use of capital. It must also be noted that over 95 per cent of investment during this period was
financed by the domestic savings only. Domestic saving rate has also improved from 23.5 per cent to
32.4 per cent over the same period. The contribution to improvement in savings has come both from
private corporate sector and public sector.
Inflation
While growth has picked up, over the years, inflation rate has been moderated to lower levels ensuring
price stability. Initially, the inflation rate accelerated steadily from an annual average of 1.7 per cent
during the 1950s to 6.4 per cent during the 1960s and further to 9.0 per cent in the 1970s before
easing marginally to 8.0 per cent in the 1980s. The inflation rate declined from an average of 11.0 cent
during 1990-95 to 5.3 per cent during the second half of the 1990s.
In the recent years, inflation rate has averaged around 5 per cent. In recognition of India's evolving
integration with the global economy and societal preferences, the resolve, going forward, is to
condition policy and expectations in the range of 4.0-4.5 per cent in the medium term. It may be of
interest to note that, since independence, the Wholesale Price Inflation on average basis was above
15 per cent in only five out of fifty years. In thirty six out of fifty years, inflation was in single digit and
on most occasions high inflation was due to shocks - food or oil.
Stability
An important characteristic of the growth phase of over a quarter of century is the country's resilience
to shocks and during this period, we have witnessed only one serious balance of payments crisis
triggered largely by the Gulf war in the early 1990s. The Indian economy in later years, could
successfully avoid any adverse contagion impact of shocks from the East Asian crisis, the Russian
crisis during 1997-98, sanction like situation in post-Pokhran scenario, and border conflict during
MayJune 1999. Seen in this context, this robust macroeconomic performance, in the face of recent oil as
well as food shocks, demonstrates the vibrancy and resilience of the Indian economy.
External sector
The Indian economy has evolved from a virtually closed economy until early 1980s to one that is
opening up and rapidly integrating into the global economy since the commencement of major reforms
in early 1990s. In terms of a traditional measure of openness, the ratio of exports and imports (both
goods and invisibles) to GDP has risen steadily from 21.1 per cent in 1991-92 to over 50 per cent in
2005-06 and is expected to have gone up further in 2006-07. Both exports and imports have been
rising above long-term trend in recent years. The merchandise trade deficit is currently close to 7 per
cent of GDP; however, the current account deficit is under 1.5 per cent of GDP, mainly due to the
knowledge and competitive advantage we have in services and the steady support from remittances
from Indians working abroad.
The liberalisation of the current account took place in the early part of the reforms and we attained
current account convertibility in August 1994. In India, capital account liberalisation is sequenced in
response to domestic developments, especially in real and fiscal sectors, and the evolving
international financial architecture.
Fiscal federalism
Under India's federal system of government, the Constitution allocates the revenue powers and
expenditure functions between the Central and State Governments. The borrowing by the sub-national
governments is in effect subordinated to prior approval by the national government. Furthermore,
State Governments are not permitted to directly borrow externally.
The fiscal management in the country has significantly improved, specially, after the adoption of the
Fiscal Responsibility and Budget Management Act, 2003 by the Central Government. The State
Governments are also adopting similar Acts and have made consistent efforts to improve fiscal
management. The fiscal consolidation, in terms of reduction in fiscal deficit, is taking place in the
finances of both the Central and State Governments.
The fiscal-management of Central Government is broadly in the direction of achieving the targeted
ratio of gross fiscal deficit (GFD) to gross domestic product (GDP) to three per cent and eliminate
revenue deficit (RD) by 2008-09. It may be noted that the GFD / GDP and RD / GDP ratios are already
budgeted to reduce to 3.3 per cent and 1.5 per cent in 2007-08. In the recent years, there has been a
significant improvement in State level finances also. The GFD of all States declined from 4.7 per cent
of GDP in 1999-2000 to 2.7 per cent of GDP in 2006-07, while the RD came down from 2.8 per cent of
GDP to 0.1 per cent of GDP. Most States have also enacted fiscal responsibility legislations. As a
result, the combined fiscal deficit of the Central and State governments has declined to around 6.6 per
cent of GDP in 2006-07 from around 10 per cent in the early 2000s.
The Reserve Bank plays two crucial roles in relation to the Indian fiscal system, namely as banker to
and debt manager of both the Central and State Governments. While undertaking the role of banker
for, both the Central and State Governments, the RBI also provides temporary support to tide over
mismatches in their receipts and payments in the form of short-term advances.
The Reserve Bank plays a significant role as Advisor to Central and State governments on federal
fiscal relations. The Reserve Bank sensitizes the State Government on important fiscal issues. Since
1997, the Reserve Bank has been organizing a biannual Conference of Finance Secretaries of State
Governments. This Conference, right from its inception, has provided a very useful forum for
interaction among all the stakeholders (State Governments, Central Government and the Reserve
Bank) on matters related to State finances and arriving at consensual solutions of issues of policy and
operational significance.
Public debt
The Reserve Bank manages the market loans, which constitute around 50 per cent of public debt of
the Centre and States. In the pre-reforms period, i.e., before 1991, the primary objective of the debt
management was to minimize costs of borrowing. This, however, resulted in repression of the financial
sector on account of statutory provisions requiring banks and financial institutions to invest in
government securities at pre-determined rates. Recognising the criticality of the impact of such a
system on financial sector development, the Reserve Bank has undertaken a series of measures since
the early 1990s to move to a market determined interest rate from the administered interest rate
regime. The automatic monetisation of budget deficits of Central Government by the Reserve Bank
was discontinued since 1997-98, and currently, the Reserve bank does not participate in the primary
issuance of the government paper.
It is true that the aggregate stock of public debt of the Centre and States as a percentage of GDP is
high, currently at around seventy five per cent. It is also useful to note that there are several unique
features of management of public debt in India, which imparts overall stability to macro-economy.
First, States have no direct exposure to external debt. Second, almost the whole of public debt is local
currency denominated and held almost wholly by residents. Third, public debt, of both Centre and
States is actively and prudently managed by the Reserve Bank of India ensuring comfort to financial
markets without any undue volatility. Fourth, the government securities market has developed
significantly in recent years in terms of turnover, depth and participants, and significant further
improvements are underway. Fifth, most debt carry fixed coupons and not indexed to inflation. Sixth,
the Government has not ventured into sovereign marketable debt issues in foreign currency. Seventh,
contractual savings supplement marketable debt in financing the deficits. Finally, direct monetary
financing of primary issues of debt has been discontinued since April 2006. Hence, the high stock of
public debt relative to GDP as also the relatively higher fiscal deficits in the past have not been a
matter of concern as far as stability is concerned. However, it is recognised that the long-term
sustainability as well as further liberalisation of the external and financial sectors, to foster growth
momentum, would call for further reduction of both debt and deficits to prudent levels.
Financial sector reforms
The Indian financial system of the pre-reform period, before 1991, essentially catered to the needs of
planned development in a mixed-economy framework, where the Government sector had a
predominant role in economic activity. Interest rates on Government securities were artificially pegged
at low levels, which were unrelated to the market conditions. The system of administered interest rates
was characterised by detailed prescriptions on the lending and the deposit side, leading to multiplicity
and complexity of interest rates. As would be expected, the environment in the financial sector in those
years was characterised by segmented and underdeveloped financial markets coupled with paucity of
financial instruments. Consequently, by the end of the eighties, directed and concessional availability
of bank credit to certain sectors adversely affected the viability and profitability of banks. Thus, the
transactions between the de facto joint balance sheet of the Government, the Reserve Bank and the
commercial banks were governed by fiscal priorities rather than sound principles of financial
management and commercial viability. It was then recognised that this approach, which, conceptually,
sought to enhance efficiency through a co-ordinated approach, actually led to loss of transparency,
accountability and incentive to seek efficiency.
Banking
The banking system in India has undergone significant changes during last 16 years. There have been
new banks, new instruments, new windows, new opportunities and, along with all this, new challenges.
While deregulation has opened up new vistas for banks to augment incomes, it has also entailed
greater competition and consequently greater risks. India adopted prudential measures aimed at
imparting strength to the banking system and ensuring its safety and soundness, through greater
transparency, accountability and public credibility. The capital adequacy ratio has increased to 12.4
per cent for scheduled commercial banks as at end March 2006, which is much above the
international norm. Commercial banks' net profits remained at 0.9 per cent of total assets during
200405 and 2005-06, up from 0.16 per cent in 1995-96. The ratio of NPLs to total loans of scheduled
commercial banks, which was as high as 15.7 per cent at end-March 1997, declined steadily to 3.3 per
cent by end-March 2006. The net non-performing assets declined to 1.2 per cent of net advances
during 2005-06 from 2.0 per cent in 2004-05. According to the preliminary financial results available for
most of the banks for the year 2006-07, the financial soundness has improved further.
Our banking sector reform has been unique in the world in that it combines a comprehensive
reorientation of competition, regulation and ownership in a non-disruptive and cost-effective manner.
Indeed our banking reform is a good illustration