business entrepreneurs, etc. 5. india being such a large country that it ’ s different regions are at different states of economic development and have been growing at different speeds. public policy does recognize this and therefore, has provisions that strategies suiting the levels and speeds of economic growth in the regions be pursued. 6. today, i will be focusing on the “ role of financial sector in the growth of the southern region ”. since banks are the major players in the financial system, my talk will be centred on the role of banks for economic growth and its future prospects for the region. i have organized my talk as follows : ( a ) i will briefly discuss about major economic parameters of the southern region. ( b ) then i will be analyzing the linkage to growth based on ( i ) deposits to gsdp ( gross state domestic product ) ( ii ) banks ’ credit to gsdp ( gross state domestic product ) ( iii ) c / d ratio and ( iv ) urban cooperative banks ( ucbs ) in the allocation of resources for economic activities in the region ( v ) role of nbfcs and ( vi ) financial inclusion – general trend in the region. bis central bankers ’ speeches ( c ) thereafter, i will discuss the scope of the banking sector in the emerging developments of the region and what more can be done by the banks to further the growth in the region. economic growth 7. during the pre – reform period of 1980s, the growth rates of the states in the southern region were generally less than the all india growth rate. during the 1990s, after the economic and financial sector reforms, these states performed better than the all - india growth rate. the growth rates were still higher, during the last 10 years or so when greater push had been given for financial inclusion. ( pl see table 1 ). per capita income 8. let us now look at another indicator of economic prosperity viz., per capita income. the per capita income of the region over the last three decades compared with other regions showed that this region has performed very well. in fact, during 1980s, this region ’ s average per capita income was below the national average. during the 1990s, while kerala and tamil nadu surpassed the national average, ap and karnataka were just below the national average. however, during the 2000s, the entire region was much more than the national average. ( pl see table 2 ) banking indicators number of offices 9. let us now turn to the role played by the commercial banks as part

various factors behind the delay in improvements in wages and prices. to summarize, i consider one of the major reasons behind the delay to be the expansion of the economy ’ s supply capacity caused by an increase in the labor supply and by firms ’ efforts toward increasing productivity. i would like to elaborate on this, because it is particularly important in considering the outlook for economic activity and prices in japan. starting with labor supply, the labor force participation rate in japan rose by 1. 8 percentage points over the five years to august 2017. over the same period, the size of the labor force increased by 1. 92 million, and this accounts for nearly 70 percent of the 2. 82 million increase in the number of employed persons. the trend in the labor force participation rate started to rise markedly from around 2012. indeed, the growth in labor force participation was remarkably rapid, considering the downward pressure on the participation rate stemming from an increasingly aging population. this reflects various structural changes in the economy resulting from, for example, measures to promote the empowerment of women and the elderly, including the provision of child - rearing and nursing care facilities, as well as extending the retirement age or abolishing traditional retirement systems amid the increase in life expectancy. i believe that these structural changes have eased the upward pressure on wages and prices by providing additional labor force to firms facing labor shortages. japan ’ s productivity has shown relatively high growth in recent years, compared with other major advanced countries, as reported for example by a u. s. private institute, although productivity figures should be regarded as being subject to a considerable margin of error because of their large measurement bias. it has been said that japan ’ s productivity is low, but this could also be taken to mean merely that there is large room for improvement. as i have already mentioned, most firms are currently trying to improve productivity, and my assessment of the current situation in japan is that, due to labor shortages, productivity is growing sharply to catch up with other countries. naturally, such an expansion in supply capacity raises the economy ’ s long - term growth potential. enhancing growth potential is an extremely important issue for japan, which is facing a decline in population. a fall in growth potential can lead, for example, to concerns about fiscal sustainability and to restraints in firms ’ and households ’ spending due to anxiety about their long - term economic outlook. in this regard, although recent developments in supply capacity may exert downward pressure on wages and prices in the short run