being faculties and students of leading business schools, must be already having a sense of that from the financial dailies. i am sure many of you may be having your own assessment of the inflation situation and your own expectations from the rbi in terms of what it should or should not do. i would try to cover in my address the way we see the recent inflation path in terms of its determinants, and why monetary policy matters so much, even if that alone is not sufficient to ensure a low and stable inflation environment. monetary policy can still ensure a fast softening of inflation but only at the cost of large sacrifice of growth, which is equally non desirable as high inflation. low inflation and robust growth – both are essential to improve economic welfare. fiscal policy also has a major role in inflation management, both in terms of containing government demand in the short - run and augmenting the supply situation in the medium - term. the effectiveness of monetary policy improves in a supportive fiscal environment. i will, therefore, also cover some of the fiscal issues in this address, and by doing so, i will try to touch upon some other dimension of the overall theme of this seminar. let me start with the oft asked question of why inflation has persisted despite rbi ’ s significant anti - inflationary monetary policy response. when we say that inflation has been “ high ” over successive months over almost two years now, it has to be seen as a relative bis central bankers ’ speeches concept. it could be high relative to either past averages or the inflation goal of the rbi. prior to the global crisis, the average wpi inflation over the five year period 2003 – 04 to 2007 – 08 was about 5. 5 percent. since january 2010, however, the wpi inflation has remained within a range of 8 to 11 percent in each of the 22 successive months. that is high relative to what we experienced before the crisis. moreover, rbi ’ s monetary policy statements suggest that rbi ’ s monetary policy continues to aim at conditioning and containing perception of inflation in the range of 4 to 4. 5 percent. the recent inflation trend, therefore, is clearly above the stated comfort level of the rbi. what explains then this persistence of high inflation? india was already dealing with double digit inflation when it had to face the contagion from the global financial crisis. india avoided a financial crisis at home, but there was some moderation in growth. along with the beneficial impact of sharp moderation in global commodity prices

##demic containment to render policy support to the public ; some made arrangements for fund allocation to shore up supply ; and some opened up green channels to deliver unimpeded services. we rolled out 30 financial support measures, cut the required reserve ratio ( rrr ) three times and launched rmb300 billion lowcost special central bank lending as well as rmb500 billion central bank lending and central bank discounts for the resumption of work and production, to name a few. fighting in solidarity with the people nationwide, the pbc staff spared no efforts to win the fight against the pandemic. now we have managed to achieve the objectives of our monetary policy and china is the only major economy in the world with positive economic growth throughout the year. our endeavors are widely recognized by the financial markets and all sectors of society and are highly appreciated by international organizations and the international community at large. we have always been concerned about the well - being of micro and small businesses ( msbs ), self - employed businesses and other market entities. affected by the pandemic, many msbs faced surging pressures for survival. they are the source of income for millions of families. they fuel the vitality of the market economy and safeguard the national economy and the people ’ s livelihood. holding fast to the two unwavering commitments, we delivered full support to stabilizing businesses and securing employment, increased rmb1 trillion quotas for inclusive central bank lending and central bank discounts, launched two new monetary policy tools providing direct support for the real economy, continuously unleashed the benefits of the loan prime rate ( lpr ) reform, rolled out a mix of measures to enable banks to increase credit 1 / 2 bis central bankers'speeches supply, prompted financial institutions to cut profits in favor of their clients as appropriate and went all out to reduce the financing cost of the real economy. up to now, banks have deferred repayments on more than rmb6 trillion worth of loans and issued over rmb3 trillion unsecured inclusive msb loans, which benefited more than 30 million business entities. the financial sector has achieved the goal of cutting rmb1. 5 trillion worth of profits in favor of the real economy. we pushed forward with the reform and opening - up of the financial sector and were determined to win the three critical battles. the pbc staff studied the guidelines of the fifth plenary session of the 19th cpc central committee and the 2020 central economic work conference,