and geographically scattered, which can play havoc with costs. organizational structures, whether within the existing providers or independent, have to be developed to accommodate these specific market conditions. from a regulatory perspective, the massive expansion of services brings with it risks and these have to be identified and provided for. i will now turn to the issue of the corporate bond market. to provide a backdrop, chart 16 shows the estimated financial requirements for infrastructure over the 12th plan period, 2012 – 17. over the next five years, over rs. 40 lakh crores or $ 1 trillion are desired to be invested. as i indicated earlier, infrastructure supply is a serious bottleneck and large, efficiently implemented and well managed projects across sectors are imperative. even as these are getting under way, there is an obvious lack of financial channels for them to mobilize resources. so far, the responsibility for financing new investments has fallen predominantly on banks. for reasons relating to asset - liability management and sector exposure limits, the capacity of banks to continue to finance this sector is limited. therefore, alternative channels have to be quickly put into place. the corporate bond market is perhaps the most important of these. for several years, one committee after another has been making recommendations for actions to develop this market. these cut across regulatory domains and this is perhaps one reason why, despite the several steps taken, a critical threshold that would make the market viable was not reached. however, in recent months this is on high priority with both the regulators and the government addressing the remaining binding constraints. the 2011 – 12 union budget took a crucial step in exempting bonds issued by infrastructure development funds from withholding tax. it would be reasonable to extend this facility to bonds issued directly by infrastructure companies. another issue that has been flagged, inter - state differentials in stamp duties, is being addressed by attempting a harmonization of rates across states. to make a large number of bonds attractive to a potentially large domestic investor base in the form of insurance and pension funds, credit enhancement mechanisms which will allow bonds to meet minimum rating requirements for a price are being explored. the more efficiently and reliably this service is delivered, the larger will be the potential pool of investment for these huge institutions. of course, aspirations notwithstanding, the question is whether bond markets can realistically emerge as an alternative channel of financing, for infrastructure certainly, but also for investment in other sectors. chart 17 provides a cross - country comparison. it would appear that even in the context of emerging

per cent by january 2016 and 5 per cent by q4 of 2016 – 17. 2016 onwards : flexible inflation targeting 17. amid this, a monetary policy framework agreement ( mpfa ) was signed between the government of india and the reserve bank on february 20, 2015. subsequently, flexible inflation targeting ( fit ) was formally adopted with the amendment of the rbi act in may 2016. the role of the reserve bank in the area of monetary policy has been restated in the amended act as follows : “ the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth ”. 18. empowered by this mandate, the rbi adopted a flexible inflation targeting ( fit ) framework under which primacy is accorded to the objective of price stability, defined numerically by a target of 4 per cent for consumer price headline inflation with a tolerance band of + / - 2 per cent around it, while simultaneously focusing on growth when inflation is under control. the relative emphasis on inflation and growth depends on the macroeconomic scenario, inflation and growth outlook, and signals emerging from incoming data. since then rbi has been conducting monetary policy in a forward - looking manner and effectively communicating its decisions to maintain inflation around its target and thereby to support growth. at the same time, rbi is also fine - tuning its operating procedures of monetary policy for effective policy transmission across the financial markets and thereby onto the real economy. as an outcome, inflation has fallen successively and has averaged below 4 per cent since 2017 – 18, notwithstanding recent up - tick in inflation driven by food prices, especially the sharp increase in vegetable prices reflecting the adverse impact of unseasonal rains and cyclone. evolution of monetary policy in line with the changing theoretical developments and international best practices 19. the monetary policy framework in india has also been guided by developments in theory and international best practices. for instance, the collapse of the bretton - woods system of fixed exchange rates and high inflation in many advanced economies during the 1970s provided the necessary background to the choice of money supply as a nominal anchor. since the late 1980s, however, experience of many advanced countries with monetary targeting framework was not satisfactory inter alia due to growing disconnect between monetary aggregates and goal variables such as inflation. a similar instability in money demand function was also evidenced in the indian context in the 1990s which led to a shift from monetary targeting to multiple indicators approach in 1998. 4 / 6 bis central bankers'speeches 20. since early 1990s, beginning with new zealand