discussing the role of agribusiness in growth and inflation, it would be apposite to define and understand the concept of agribusiness. way back in 1957, davis and goldberg 1 had defined agribusiness very lucidly as the sum total of all operations involved in the manufacture and distribution of farm supplies ; production operations on the farm ; and the storage, processing and distribution of farm commodities and items made from them. thus, agribusiness essentially encompasses today, the functions which the term agriculture denoted 150 years ago and agriculture now is a subset of the larger superset called agribusiness. as far as growth and inflation is concerned, you may be aware that the weights attached to objective of growth vis - a - vis that of price stability in choice of policy measures vary according to the extant macroeconomic environment. for example, during the great moderation, the policies all over the world were focussed on growth enhancing measures. presently, in view of the continuance of low inflation and low or negative growth in the developed economies, the policy measures, mainly in the form of liquidity enhancement and low interest rates, continue to focus on augmentation of growth. quoted from king, robert p., michael boehlje, michael cook, and steven t. sonka ( 2010 ) “ agribusiness economics and management ”, american journal of agricultural economics, special issue commemorating the centennial of the aaea, vol. 92, no. 2, april bis central bankers ’ speeches in india, however, the conditions are very different. along with economic slowdown, inflation is ruling significantly above the threshold level, beyond which inflation turns inimical to growth. under the current macroeconomic environment, indian policy makers have to think of various measures that can simultaneously achieve the twin objectives of higher growth and lower inflation. opinions differ on the utility of different policy measures at the current juncture and you all may be familiar with the current debate on the timing, sequencing and complementarity of various measures. there is, however, near unanimity, amongst all that agriculture and agribusiness growth is a necessary prerequisite for moderation of inflation, particularly food inflation, as well as for acceleration and sustenance of inclusive growth. the impact of agribusiness on inflation is also both direct and indirect. the direct impact of agribusiness is visible in the form of food inflation. with demand arising from increasing population and

funds rate eventually gets transmitted to other interest rates and impact the economy. thus, the operating procedure of the fed is focussed on keeping the federal funds rate at a preannounced target level. first, based on the outlook of inflation and growth, the target for the federal funds rate is announced by the federal open market committee ( fomc ). second, the fed attempts to adjust the total supply of reserve balances so that it exactly equals demand at the target federal funds rate. this adjustment of total supply of reserve balances available to commercial banks is carried out primarily through open market operations ( omo ) where government bonds or other securities are exchanged for reserves. the omo is largely conducted by arranging overnight repurchase ( repo ) auctions with primary dealers. besides omo, credits provided by the fed to banks at a rate higher than the federal funds rate – called discount rate – play an important role in the implementation of monetary policy. credits are provided under two programmes, viz., primary credit and secondary credit. under primary credit, the fed extends short - term credit to eligible banks at a rate above the target federal funds rate. since the fed operates in a systemic liquidity deficit mode, the interest rate on primary credit acts as the upper ceiling for the federal funds rate. secondary credit is provided only under abnormal circumstances when depository institutions do not qualify for primary credit or for resolution of financial difficulties. understandably, the interest rate charged for this credit is higher than that for primary credit. as such, there was no lower bound for federal funds rate. however, since december 2008, the fed has been providing remuneration to all reserves at the rate of 25 basis points. this rate on reserves is expected to act as the lower bound to the federal funds rate. bank of england let me first illustrate the normal monetary operating procedure of the boe which has been suspended since march 2009 following the global financial crisis. each of the uk banks and building societies, eligible and participating in the reserves - averaging scheme, is required to set its own target of average sterling reserve balances it will hold during a reserve maintenance period. 2 the boe remunerates these reserves holding at the bank rate so long as they are, on an average, over the maintenance period, within a small range around the target. thus, to keep the reserve balances within the target range, banks lend and borrow among themselves in the sterling interbank market. the aim of the bo