jerome powell : brief remarks brief remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the global finance forum, washington dc, 20 april 2017. * * * thank you for inviting me to speak here today. 1 i will begin by looking back at the global financial crisis and the great recession, which were arriving on the horizon at about this time 10 years ago. for the united states and many other countries, this would turn out to be the most painful economic crisis since the great depression. the fact that we had a severe recession but not another depression is a tribute to the aggressive response of those who were in a position to act at that time. 2 in the event, the financial system avoided collapse but incurred severe damage and proved incapable, for a time, of performing its key functions. that was true of the largest investment and commercial banks, several of which either failed or required taxpayer support to survive. it was also true of the many pieces of the financial market infrastructure whose structural weaknesses contributed to the crisis, such as the triparty repurchase agreement ( repo ) market, the over - thecounter derivative market, and prime money market funds. the financial turmoil caused heavy damage to the real economy. payroll employment declined by almost 9 million ; over 7 million people lost their homes. 3 many young people entered a terrible job market ; research shows that this may adversely affect their careers for many years. many experienced workers who lost their jobs may suffer permanently lower income prospects. 4 the nation faced two big tasks after the crisis. we had to get the economy growing again so people could get back to work and rebuild their financial lives. and we had to return the financial system to good health and address the many structural weaknesses that had become apparent. today, the first of those tasks is well along. we have gone eight years without a subsequent recession - - one of the longest recoveries on record. employment is now almost 7 million jobs higher than its pre - crisis peak, with all of the net gains coming from the private sector. and with unemployment at 4. 5 percent, we are at or close to full employment. but all is not well. although job growth has been strong, gross domestic product has increased only about 2 percent annually since the crisis, held down by the weakest sustained period of labor productivity growth since world war ii. labor productivity - - the increase in output per hour - has increased only 1 / 2 percent per

. 12. in recent years, yields of crops have remained low and there has been a progressive hike in minimum support price ( msp ) for wheat and rice. this may be seen as a continuation of policy tilt in favour of price intervention as against non - price intervention followed in the post - reform years. this has ensured sufficient and steady procurement of foodgrains which can cater to meet the demand of the public distribution system ( pds ) and various welfare schemes of the government. however, for various reasons, off - take of foodgrains has not kept pace with procurement. 13. skewed incentives as regard rice and wheat have affected land use and cropping pattern with public procurement remaining concentrated in a few states. currently in most states, the msp is a purely a notional price as far as farmers are concerned. farmers know that they have an option to sell their produce at msp but they have no access to government granaries or take - in windows. 14. lower off - take, despite adoption of the decentralized procurement scheme ( dcp ) under which foodgrains are procured and distributed by the state itself, combined with higher procurement has resulted in large stocks of foodgrains, which are often higher than bis central bankers ’ speeches the required buffer norms and food security reserves. in the past three decades, except for a few years, aggregate procurement of rice and wheat has been higher than their off - take. 15. to sum up, indian agricultural situation today, therefore, is a mix of declining yields, low productivity, inter and intra - state and regional disparities, skewed incentives and inappropriate food stock management in the backdrop of increasing concerns on food security and food price volatility. in this context, a frequent refrain is that credit is not available. while empirically this is not the case, let me ask you all whether credit is an important component of raising productivity? if yes, then do we know the direction of credit? can credit alone solve all the problems of declining or low agricultural productivity and how, after all, do we improve productivity? i would like to focus on major trends in agricultural credit and its role in improving productivity. trends in agricultural finance 16. in india, where the formal financial system is predominantly bank - oriented, banks play an important role in financing the needs of agricultural sector. with the aim of facilitating the timely and adequate credit flow to agriculture, the sector has been targeted as a part of the