or losses, at least if those accounts were also to be marked to market. so gilt price movements necessarily all wash out once the public accounts are compiled on a consistent basis, at least so long as the assets are retained within the public sector 3. we do not, however, expect to retain all the purchased assets in the asset purchase facility to maturity. at some stage, as the recovery proceeds, the monetary policy committee will need gradually to remove the large monetary stimulus that we have imparted to the economy, otherwise we will be in danger of overshooting our 2 % inflation target. that monetary tightening will take the form of some combination of a higher level of bank rate and asset sales from the asset purchase facility to the private sector. the process of selling off the gilts can then be expected to push gilt yields back up towards where they would have been in the absence of the quantitative easing programme. when the asset purchase facility is finally run down, won ’ t the closing accounts tell us about the benefits or costs of the programme? the answer to this is : no. the first point to make is that the aim of quantitative easing and the asset purchase facility is to help the monetary policy committee achieve its macroeconomic objective, namely hitting the government ’ s inflation target without generating undue volatility in output. the accounts of the asset purchase facility are not designed to address these overall macroeconomic costs or benefits, which instead requires an assessment of the impact of quantitative easing on demand and inflation. as i have already noted, this is a difficult issue which is likely to keep researchers busy for many years to come. second, even if one were interested in the rather narrower issue of the impact of quantitative easing on the public finances, whether the treasury ends up with a profit or a loss from the asset purchase facility represents only a small part of the picture. gilt yields will be lower than they would otherwise have been during the period that they are held in the asset purchase facility, so reducing the cost of financing a given budget deficit. this needs to be factored into any calculation of the implications for the public finances. rather more significantly, quantitative easing is intended to boost spending and activity. in the process, it should raise tax revenues and reduce benefit payments. and, unless quantitative easing proves to be largely ineffective, this effect is likely to dominate the other elements of the calculation. finally, it is worth noting that normal monetary policy, conducted by varying bank rate, also generally affects

##trillion dollar ( and not a one trillion dollar ) economy! although some argue that india catapulted to the trillion dollar league in 2007 on account of gdp valuation based on sharply appreciated exchange rate that resulted from huge inflows of foreign exchange, most others consider this as an emerging sign of take - off that could accelerate the growth momentum going forward. last year, economists at morgan stanley and other long - range forecasters predicted that india ’ s growth will start to outpace china ’ s within three to five years and continue at a faster rate than any other large country over the next 20 to 25 years. hence, i believe, and others do so too, that the indian economy is set to experience double digit growth during the coming two to three decades. while the future growth outlook of the indian economy looks promising, the challenge is to make it more inclusive. at the grassroots level, india continues to be a poor and less developed country in spite of years of financial and other support provided by the government to equity enhancing distributional programmes and the spectacular turnaround in investment and growth. according to a planning commission report on the methodology of estimation of poverty issued in 2009, the all india poverty head count ratio was at 37. 2 per cent in 2004 – 05 compared to 45. 3 per cent in 1993 – 94. prima facie, while the slow pace of reduction in poverty due to high population growth rate, large workforce still dependent on agriculture and illiteracy continue to obstruct the growth potential, the paradigm that these disabilities can be nevertheless be turned around into a winning proposition is also surely within the realm of possibility. in fact, many of the disadvantages which the indian economy faced in the past has already been waned and turned out to be advantages. to illustrate, a disadvantage that has plagued bis central bankers ’ speeches most developing economies including india has been that of scarcity of capital. this scarcity has hindered the investment and growth prospects of these economies in the past. this, however, is no longer a disadvantage. with most countries including india opening their doors to foreign investment, the question is no longer of scarcity of capital but the rate of return that we can pay on this capital. hence, capital is no longer a constraint in the era of liberalization and globalization if we are able to pay the required return and are able to attract the capital flows into our economies especially in the form of foreign direct investment. further, high population growth was another