the overnight call money rate is stronger than the overnight money market rate. in addition, the call money market is a pure inter - bank market and, hence, better reflects the net liquidity situation. reserve bank of india ( 2011 ), report of the working group on operating procedure of monetary policy ( chairman : deepak mohanty ), march. bis central bankers ’ speeches since may 2011, the liquidity conditions can be broadly divided into three distinct phases. after generally remaining within the reserve bank ’ s comfort zone during the first phase during may – october 2011, the liquidity deficit crossed the one per cent of ndtl level during november 2011 to june 2012. this large liquidity deficit was mainly caused by forex intervention and increased divergence between credit and deposit growth. the deficit conditions were further aggravated by frictional factors like the build - up of government cash balances with the reserve bank that persisted longer than anticipated and the increase in currency in circulation. accordingly, the reserve bank had to actively manage liquidity through injection of liquidity by way of open market operations ( omos ) and cut in cash reserve ratio ( crr ) of banks. this was supported by decline in currency in circulation and a reduction in government cash balances with the reserve bank. as a result, there was a significant easing of liquidity conditions since july 2012 with the extent of the deficit broadly returning to the reserve bank ’ s comfort level of one per cent of ndtl ( chart 7 ). bis central bankers ’ speeches since its implementation, the systemic liquidity has been in deficit mode, which has helped in better transmission of policy rate to various segments of money markets. first, the overnight interest rate has been more stable since its implementation ( chart 8 ). second, the repo rate and weighted call rate are far more closely aligned under the new operating procedure than earlier ; implying improved transmission of monetary policy in terms of movement in call money market interest rate ( chart 9 ). bis central bankers ’ speeches third, the call money rate in turn is observed to be better aligned with other money market interest rates after the implementation of new operating procedure than before ( chart 10 ). conclusion let me conclude. our experience shows that the development of money market and refinements in operating procedures of monetary policy have moved in tandem. financial sector reforms along with reserve bank ’ s emphasis on development of various segments of financial market enabled shifts in operating procedures based on direct quantity - based instruments to indirect interest rate - based

emerging india : a land of stability and opportunities keynote speech by shri shaktikanta das, governor reserve bank of india delivered at the symposium on indian economy 2023 organised by institute of indian economic studies at the tokyo chamber of commerce and industry, tokyo, japan on november 9, 2023 i am delighted to participate in this symposium on indian economy organised by the institute of indian economic studies ( iies ), tokyo. i understand this event is being organised by the iies after a gap of 3 years due to the intervening period of the covid - 19 pandemic. earlier this year in march 2023, prof. sakakibara and mr. sugaya had visited the reserve bank of india in mumbai when we discussed about my participation in this symposium. i would like to convey my sincere thanks and gratitude to prof. sakakibara and the iies for inviting me to participate in this event today. 2. the global economy continues to face multiple macroeconomic and geopolitical shocks. the prediction of a global recession has not come true but there are indications that global growth is slowing down amid tightening financial conditions and still elevated inflation. even as the fallouts of the pandemic, the war in ukraine and the unprecedented tightening of monetary policy reverberate across the world, the recent developments in west asia have added to the litany of challenges for the global economy. policymaking in this scenario becomes extremely challenging with difficult trade - offs – growth versus inflation ; price stability versus financial stability ; and current exigency versus future sustainability. there is always a risk of doing too little or doing too much. in such a scenario, i would like to start with the reserve bank of india ’ s approach to policy making during this turbulent period. our approach 3. to protect the economy from the relentless shocks in the recent period, our endeavour has been to remain proactive, pragmatic and prudent in our policy response. we were conscious of the fact that an overdose of monetary medicine, while relieving the pain in the short run, could give rise to increased vulnerability and fragility over a period of time. following the onset of the covid - 19 pandemic, we injected liquidity, but almost every measure of liquidity injection was for a limited period and was targeted. by doing so, we avoided the pitfall of a liquidity trap. further, our lending standards were not diluted in terms of our counterparties ( banks