, led to a veritable credit bubble, characterized by unprecedented underpricing of risk as reflected in the all - time - low risk premia with junk bond spreads becoming indistinguishable from investment grade debt, and thus, to paraphrase jim grant, the riskiest of assets effectively offering return free risk! all this while, the us growth story stayed non - inflationary due primarily to cheap imports from china, asia and emes which, only perversely, reinforced the continuation of the loose monetary policy, focused, as i just said, as it was on the shop - floor - price inflation to the complete exclusion of the broader “ asset price ” inflation! such a low interest rate environment, coupled with luxuriant supply of liquidity, created enabling environment for excessive leverage and risk taking so much so that american household debt exceeded the country's gdp! in fact, in the us, in particular, the financial sector, instead of being a means to an end of sub - serving the real sector, ended up being an end in itself. interestingly, in this context, satyajit das, a world renowned expert in derivatives, in his characteristic breezy and racy style, describes the financial syndrome as “ too much ” and “ too little ” – too much liquidity, too much leverage, too much complex financial engineering, too little return for risk, too little understanding of risks ”. this syndrome of too much of arcane rocket science and financial alchemy in the financial sector, almost entirely for its own sake to almost complete exclusion of the needs of the real sector, created a massive “ financial sector – real sector imbalance ” which, being, intrinsically unsustainable, culminated eventually into the now - all - too - familiar apocalyptic denouement, entailing cumulative global write - downs and credit losses aggregating us $ 2 trillion by banks and financial firms. bis central bankers ’ speeches as i observed in my speech, “ identifying systemic risk in global markets – lessons learned from the crisis : asian regulators ’ views on what have they done to contain the building up of systemic risk and to prevent the recurrence of future crisis ”, delivered at the 2nd pan - asian regulatory summit at singapore, in september 2011, systemic risks in global markets can be best identified and measured by looking at some select key parameters which, between them, indicate the extent of asset bubbles and the corresponding under - pricing of risks and,

second in the context of the possibility of india becoming “ factory to the world ”, at the level of the organized manufacturing sector, which will be key to realizing that aspiration. the story at the aggregate level is told by charts 2, 3 and 4. chart 2 depicts a relatively slow transition in the labour force, using the household employment data from 55th ( 1999 – 00 ) and 61st ( 2004 – 05 ) rounds of the national sample survey as points of comparison. over the five - year period, the labour force increased from 397 million to 456 million. 18 million of the increment was absorbed by agriculture, 13 million by industry and 28 million by services ( including construction ). the fact that two - thirds of the incremental number of workers were absorbed by sectors other than agriculture is a welcome sign from the productivity perspective, as i will demonstrate a little later on. however, the more worrying aspect of the slow transition is that the share of the total workforce employed in agriculture only declined from 60 per cent in 1999 – 00 to 57 per cent five years later. the share of industry increased from 12 per cent to 13 per cent and the share of services went up from 28 per cent to 30 per cent. as is well known, this pattern is almost the mirror image of the distribution of gdp across the three sectors. chart 3 displays the transition in these shares over the same period. agriculture, already the smallest sector, lost some of its share, while services gained share in gdp somewhat more than they gained share in the labour force. in the overall context of my theme, the relative stagnation in the share of industry in both gdp and the labour force is of particular concern. let me now translate these two sets of numbers into broad productivity indices. chart 4 displays the ratio of average gdp per worker, a rough indicator of labour productivity, in industry and services to that in agriculture. the ratio for industry rose marginally from 4. 1 in 1999 – 00 to 4. 2 in 2004 – 05. the ratio for services rose somewhat more, from 4. 8 in 1999 – 00 to 5. 5 in 2004 – 05. however, regardless of the magnitude of increase and the differential across the two sectors, the stark fact is that average labour productivity outside agriculture is about 5 times that in agriculture. this has very significant implications for inclusive growth. simple arithmetic says that every worker who moves from agriculture to other sectors will increase his / her net contribution to gdp by four