pillars : financial stability assessment and stress testing ; legal, infrastructural and market development issues ; and an assessment of the status of implementation of international financial standards and codes. the first pillar is essentially concerned with stability assessment. taking into account the legal, regulatory and supervisory architecture in india, the cfsa felt the need for involving, and associating closely, all the major regulatory institutions in the financial sector – the rbi, sebi and irda, besides the relevant government departments. direct official involvement at different levels brought about enormous responsibility, ownership, and commitment to the process, ensuring constructive pragmatism when faced with contentious issues. since the assessment required comprehensive domain knowledge in the various technical areas examined, the cfsa initially constituted technical groups comprising officials with first - hand experience in handling the respective areas from the regulatory agencies concerned as well as the government to undertake the preliminary assessment and to prepare technical notes and background material in the concerned areas. this ensured that officials who are well - conversant with their own systems and are aware of the existing strengths and weaknesses could identify the best alternative solutions. to ensure an impartial assessment, the cfsa constituted four external independent advisory panels, comprising non - official experts drawn from within the country. these panels made their assessments after thorough debate and rigorous scrutiny of inputs provided by the technical groups. to further strengthen the credibility of this assessment, the advisory panels ’ assessments were peer reviewed by eminent international experts. the cfsa then drew up its own overview report at the final stage, drawing upon the assessments, findings and recommendations of the advisory panels and the comments of the peer reviewers. the assessments and recommendations comprise six volumes. all the six volumes are freely available on rbi ’ s website and i would strongly recommend that you read them. if six volumes are daunting, then read at least the first two volumes, viz., the executive summary and the overview report. overall, the cfsa found that our financial system is essentially sound and resilient, and that systemic stability is by and large robust. india is broadly compliant with most of the standards and codes though gaps were noted in the timely implementation of bankruptcy proceedings. of immediate interest, and related closely to the current macroeconomic conditions, the cfsa also carried out single - factor stress - tests for credit and market risks and liquidity ratio and scenario analyses. these tests show that there are no significant vulnerabilities in the banking system. this does not mean that npas

raghuram rajan : make in india, largely for india talk by dr raghuram rajan, governor of the reserve bank of india, at the bharat ram memorial lecture, new delhi, 2 december 2014. * * * the global economy is still weak, despite a strengthening recovery in the united states. the euro area is veering close to recession, japan has already experienced two quarters of negative growth after a tax hike, and many emerging markets are rethinking their export - led growth models as the industrial world stagnates. in the last couple of years, the imf has repeatedly reduced its growth forecasts. after 6 years of a tepid post - crisis recovery, the imf titled its most recent world economic outlook “ legacies, clouds, uncertainties ”. the conventional diagnosis and remedy why is the world finding it so hard to resume pre - great recession growth rates, let alone restore the levels of gdp that would have been attained if the great recession had not happened? the obvious answer is that the legacy of the financial boom that preceded the great recession is debt, and the overhang of debt, whether on governments, households, or banks, is holding back growth. in the colourful words of the imf ’ s managing director, we are experiencing “ the new mediocre ”. the implication is that growth is unacceptably low relative to potential, and more can be done to lift it, especially given that a number of economies are flirting with deflation. hence the conventional policy advice urges yet more innovative monetary interventions with an ever expanding set of acronyms, even while governments are urged to spend on “ obvious ” needs such as infrastructure. while the need for structural reforms is acknowledged, they are typically deemed painful, and possibly growth - reducing in the short run. hence the accent is on monetary and fiscal stimulus, and as much of it as possible given the deadening effects of debt overhang. the efficacy of such policy advice remains to be seen. but the japanese checked each of these boxes over the last two decades, including interest rates held low for long, quantitative easing, and massive debt - financed spending on infrastructure. few would argue that japan has shed its seeming malaise. a different diagnosis a different narrative of the pre - crisis period is now emerging that may explain why the efforts at stimulating economies back to the pre - crisis growth paths have not been successful, even six years after the crisis. 1 the term “ secular st