non - banking activities also, the transmission of monetary policy through both credit and monetary channels is also impacted in this environment. in brief, the operation of monetary policy in india has to be oriented around the predominantly public sector ownership of the banking system. this plays a critical role not only in the transmission of monetary policy signals but also in other public policy considerations which may overlap or even dominate monetary policy objectives. vii. concluding remarks to conclude, the role of rbi has been redefined through gradual evolution and adaptation, along with some statutory changes, and not through any radical restructuring. further, while assessing the autonomy of the rbi, one should recognise that rbi is not a pure monetary authority but is responsible for several other functions also, as a central bank. the developments in the recent past lead one to the conclusion that, de facto, there has been enhancement of the autonomy of the rbi. as regards monetary policy framework, the objectives remained the same but the framework has been changed from time to time in a gradual fashion in response to the evolving circumstances. contextually, there are three important issues in the conduct of monetary policy viz., the assessment of potential output, the measurement of unemployment and appropriate measure of inflation. while the policy tries to cope with these issues, a combination of instruments is necessarily used in a flexible manner to meet these complexities. every effort has been made to improve the transmission channels especially through the financial markets, and through regulatory and institutional reforms. in addition, there are some constraints in the conduct of monetary policy, in particular, the fiscal impact, predominant public ownership, prevalence of administered interest rate, etc. while these challenges and dilemmas persist in the indian context, every effort is made by the rbi to meet the broader objectives set forth, from time to time. let me conclude by thanking professor vyas for giving me this opportunity to be with you. i enjoyed being here despite the onset of uncertainties in my travel back to mumbai due to disruptions caused by the monsoon conditions in mumbai. thank you. references & bibliography reserve bank of india. ( 2006 ). report on currency and finance, 2004 - 05. balachandran, g. ( 1998 ). “ the reserve bank of india : 1951 - 1967 ”. oxford university press, delhi. bank for international settlements ( 2007 ). 77th annual report : 1 april 2006 - 31 march 2007. basel, june 24. chandavarkar, a. ( 2005 ). “ towards an independent federal reserve bank of

policy statements. consideration of macroeconomic and financial stability is also subsumed in the articulation of policy. the rbi is also entrusted with the management of foreign exchange reserves, which are reflected in its balance sheet. while rbi is essentially a monetary authority, its founding statute mandates it to be the manager of public debt of the government of india and banker to the government. in terms of section 20 of the rbi act 1934, rbi has the obligation to undertake the receipts and payments of the central government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the union. in the recent past, a functional separation of monetary and debt management was debated and the union budget for 2007 - 08 has announced a proposal to setting up of an autonomous debt management office to keep the debt management distinct from monetary management. further, as per section 21 of the said act, rbi has the right to transact government business of the union in india. while, as per statute, rbi is the monetary authority of the country, the rbi has also been entrusted with the work relating to banking and supervision by an enactment in 1949. the rbi exercised a tight regime of exchange control particularly under the foreign exchange regulation act ( fera ), 1973 ; but, a qualitative change was brought about in the legal framework to enable liberalization by the enactment of the foreign exchange management act ( fema ) in june 2000 replacing the earlier fera. with this, the objectives of regulation have been redefined as facilitating trade and payments as well as orderly development and functioning of foreign exchange market in india. it is significant to note that the rbi act, section 19 precludes rbi from performing certain business which protects the integrity of the institution, such as trading or taking any direct interest in commercial, industrial or other undertaking, purchasing shares or giving loans against shares, and advancing money on security of immovable property, drawing or accepting bills payable otherwise than on demand. because of the last provision, the rbi evolved the market stabilisation scheme through an mou with the government, for undertaking stabilisation operations. on practical considerations, central bank independence may be viewed as related broadly to three areas, viz., management including personnel matters ; financial aspects ; and conduct of policy. managerial independence refers to the procedures for appointment, term of office and dismissal procedures of top central bank officials and the governing board. it also includes the extent and nature of representation of the government in