have seen an encouraging improvement on the inflation front, despite the stickiness above the midpoint of the target band. the headline rate of inflation, which peaked at 6. 7 % in december 2016, fell to 4. 6 % in july 2017. part of this slowdown reflects the more benign developments on the food and energy fronts. helped by a strong rebound in grain production following the 2015 / 16 drought, which sharply reduced the prices of cereals, food inflation has fallen to 5. 7 % from a high of 11. 8 % last december. fuel inflation is still off its early - page 3 of 8 year highs, while the modest gain in electricity prices in july 2017 has improved the overall year - on - year cpi comparison. however, not all of the inflation slowdown is attributable to these transitory factors. encouragingly, after a long upward drift, core inflation fell from a peak of 5. 9 % last december to 4. 6 % in july. furthermore, this moderation was stronger than both the market consensus and the sarb expectations at the start of the year, as evidenced by the regular downward adjustments to our inflation projections. true : a large part of the deceleration in core inflation occurred in the goods sector, especially in those subsectors where import penetration is elevated, and these subsectors clearly benefitted from a recovery in the rand from early 2016 to march 2017 ( an improvement of 37 % in nominal, trade - weighted terms ). yet the magnitude of that slowdown in inflation, just like the absence of upside price pressures in the services sector ( in particular in housing and insurance ), surprised most observers. the marked improvement in the inflation forecast, as well as the significant deterioration in the growth outlook coupled with an assessment by the monetary policy committee ( mpc ) of the risks to the inflation outlook being more or less balanced, gave the mpc room for a moderate reduction in the repurchase rate of 25 basis points to 6. 75 % at its july meeting. the current rates of inflation are not expected to fully persist, in large part because they still reflect the lagged impact of last year [UNK] s rand recovery, which has already partly reversed. indeed, the sarb [UNK] s latest projections see inflation rising back to 5. 3 % by the third quarter of 2018 and stabilising around these levels over the remainder of the forecast period. by the time of the mpc [UNK] s september meeting, while the inflation outlook

, takes steps to resolve it, and ensures fair recovery for lenders and investors. we could wish for a more effective judicial process or a better bankruptcy system, but while we await that, we have to improve the functioning of what we have. in the next few weeks, we will announce measures to incentivise early recognition, better resolution, and fair recovery of distressed loans. we will focus on putting real assets back to work in their best use. here again, you bankers have a critical role to play by fighting the natural incentives that are built in to the system. you have to help those with genuine difficulty while being firm with those who are trying to milk the system. the rbi will help you with every means at our disposal. let me conclude. we are going through a period of great cynicism about what india can do. that cynicism does not just permeate the foreign press and their audiences, but also infects our domestic debate. every policy is greeted with suspicion and scrutinised for evidence of malfeasance. with no upside to making decisions, it is no wonder that decision making has slowed. the solution, however, cannot come through inaction but through action, action that is, and is seen to be, purposeful, unbiased, and effective. no doubt mistakes will be made, but if the weight of clean actions builds up, the miasma of suspicion that pervades our society today will ebb. the reserve bank of india intends to play its part in making this happen. bis central bankers ’ speeches