a result, the old - age dependency ratio in oecd countries is projected to reach nearly 50 per cent by 2050. as has been documented in this symposium, this is going to pose a huge fiscal burden in terms of social security, health care, pension and other related expenditures. in this regard, an oecd exercise reveals a rise in old age pension spending, on an average, by about 3 - 4 percentage points of gdp over the period till 2050. expenditure relating to health and long term medical care is estimated to increase by more than 3 percentage points of gdp over the same period. overall, total age - related expenditures relative to gdp could rise on average by about 7 percentage points over the period 2000 - 2050. in turn, this would imply an average decline of 6 - 7 percentage points in the primary balance to gdp ratio. the economic impact of the decline in dependency ratios is usually beneficial and is often referred as the ‘ demographic dividend ’. many developing countries may temporarily experience increase in economic growth in the wake of a declining dependency ratio. falling birthrates would increase female participation in the workforce thereby increasing the supply of labour resulting in higher economic growth. an additional benefit from smaller families is that parents would invest more in the education of children. almost a third of east asia ’ s growth in per capita income between 1965 and 1990 is attributed to the demographic dividend ( bloom and williamson, 1998 ). the impetus to economic growth arising from declining dependency ratios, however, also depends on government policy. however, many latin american countries experienced declining dependency ratios during the past 40 years without enjoying the rapid economic growth of east asian countries. it has been argued that recurrent financial crises and high trade tariffs in latin america reduced the size of its demographic dividend ( bloom, canning and sevilla, 2001 ). given the experiences of the developed ( oecd ) and latin american countries, it is interesting to compare those with the emerging scenario in asia. at present, most of the developing countries in asia are in the middle path of demographic transition and potentially in a favorable position on the economic front due to relatively large working populations. this demographic dividend or “ demographic gift ” may not last long as the asian population is ageing at a faster rate than global population with rapid improvement in nutrition and health care ( williamson, 2001 ). the policy options to handle this problem are wide and varied across countries due to them being in different stages of the demographic transition. in this context,

y v reddy : role of monetary policy in attaining growth with stability - the indian experience address by dr y v reddy, governor of the reserve bank of india, at the bank of greece, athens, 2 april 2007. * * * governor garganas and friends, i am honoured by the kind and persuasive invitation of governor garganas to visit greece and give an address at the central bank. the ties and understanding between greece and india can be traced to at least well over two millennia. there are references to megasthenes as greek ambassador in the chandragupta maurya's court of pataliputra in the 4th century b. c. the monetary museum of reserve bank of india displays coins, which indicate active trade between mauryan empire in india and greece over two thousand years ago. for me personally, it is an exhilarating experience to be in the land with which socrates, plato and aristotle are associated. in fact, enthusiastic grounding in their philosophy, in my youth, helped me not to only get through the civil services examination forty years ago but also prompted me to pursue, in my own way, knowledge and truth. i am grateful to this country for all the wisdom and inspiration, which still guide us. my address today is on a theme traditionally close to the heart of any central banker but gaining increasing and broader relevance in the context of market integration and globalisation. i will make a brief presentation on the evidence of impressive and accelerating growth in india ; reining in inflation and containment of inflation expectations ; and assurance of financial stability. recognising that several factors contribute to this, i would like to highlight the role of monetary policy in this complex process. 1. evidence of impressive and accelerating growth the average growth rate of the indian economy over a period of 25 years since 1980 - 81 ( india ’ s fiscal year is from 1st april to 31st march ) has been about 6. 0 per cent, which is quite a significant improvement over the annual growth rate of 3. 5 per cent over the previous three decades from 195051 to 1979 - 80. in the more recent period, the indian economy has entered what one might call a highgrowth phase, the growth rate averaging 8. 6 per cent per annum in the last three years. in the last two years, the growth rate has averaged 9. 1 per cent. while the gdp growth has accelerated, the population growth rate has moderated. the combined effects of these have