earlier periods. the policy will continue to address the prevalent issues of containing the inflation expectations and sustaining the growth prospects. medium - term prospects for a large and diverse economy with a low per capita income that is undergoing structural transformation in a highly uncertain global environment, challenges for public policy are manifold. i would focus on a few, which we in the rbi consider to be crucial for enhancing medium term prospects for equitable growth. first, while over 60 per cent of the workforce is dependent on agriculture, the sector accounts for less than 20 per cent of the gdp. further, the gdp growth generated from agriculture is only marginally above the rate of growth of the population, which is not adequate to ensure rapid poverty reduction. volatility in agricultural production has not only implications for overall growth but also, as the recent experience has amply demonstrated, for maintaining low and stable inflation. enhanced growth of the agricultural sector is vital for ensuring food security, poverty alleviation, price stability, overall inclusive growth and sustainability of growth of the overall economy. recently, our honourable prime minister announced a major scheme to double the growth rate of agriculture to 4. 0 per cent over the 11th plan period. a time - bound food security mission was also announced to counter rising prices of food products and to ensure visible changes in their availability over three years. second, the inadequate availability of modern infrastructure and shortage of skilled manpower are the most critical barriers to the growth of the manufacturing sector. it is essential to augment the existing infrastructure facilities, particularly roads, ports and power, to provide the enabling environment for industry to prosper. the most important issues here are regulatory framework and overall investment climate, which are being addressed by the government. one other concern has been the cost recovery, which is expected to improve with enlightened public - private partnership. india has the design, construction, technological, organisational and financial capabilities domestically to bring about efficient and prompt improvements in physical infrastructure to meet the emerging demand pressures. third, a salient feature of the fiscal consolidation process in recent years, even after accounting for cyclical elements, has been significant reduction in the key deficit indicators. our studies on state finances in the rbi give grounds for optimism in regard to their fiscal health. in fact, some state governments are buying back their debt from the market and a few others are reducing their planned market borrowings. we recognize two important areas that, if addressed, would result in fiscal empowerment both at the centre and the states. one is

##oquence in several fora – including the g30 conclaves. in my brief address today, i will make a few observations on india ’ s prospects for growth with stability in both short and medium terms, by highlighting a few important aspects. during the discussion that follows, we could interact on the major focus, as well as specifics, that is of interest to the gathering today. short - term prospects for policy purposes, real gdp growth has been estimated to be in the range of 8 to 8. 5 % for the year 2008 - 2009 ( year ending march 2009 ). there are several reasons why this expectation is realistic. over the last five years, the indian economy has expanded on an average at 8. 7 percent per annum. in fact, gdp growth was 9. 6 percent in 2006 - 2007 and has moderated to an estimated 8. 7 percent in 2007 - 2008. this moderation is partly attributable to preemptive monetary policy actions that sought to dampen excessive demand pressures, while continuing with enabling environment to enhance supply - side responses in terms of investments. while there is a growing importance of global factors, india ’ s growth is mainly driven by domestic demand and supply factors. gross domestic savings continue to be around 35 % of gdp and available evidence points to continued increases in productivity. the realisation of the expected growth in the current year assumes normal monsoons and a slow - down in global growth by not more than what is currently assessed. monetary policy in india accords appropriate priority for price stability in recognition of its significance for the large segment of the poor who have no hedge. further, the policy recognizes that high growth benefits the poor with a lag, while inflation adversely affects them instantly. hence the current high - level of inflation is totally unacceptable, especially in terms of impact on inflation expectations. the monetary policy, however, reckons the complexities of the current bout of inflation. accordingly, the recent emphasis is on liquidity management with option to take recourse to all other measures, as necessary, so that demand pressures are contained consistent with supply - side responses from the markets and from the central and the state governments. the annual policy plans for a reduced rate of money supply in the range of 16. 5 to 17 % in 2008 - 2009, while correspondingly placing growth of non - food credit at around 20 %. as per indications, the currently elevated level of the wholesale price index may start moderating noticeably as monetary