/ under banked areas. financial inclusion, including msme finance and the drive to universal access is the national mandate. financial inclusion makes growth broad based and sustainable by progressively encompassing the hitherto excluded population. with an objective of ensuring uniform progress in provision of banking services in all parts of the country, banks were advised to draw up a roadmap to provide banking services through a banking outlet in every unbanked village having a population of over 2, 000 by march 2012. the reserve bank advised banks that such banking services need not necessarily be extended through a brick and mortar branch but could be provided also through any of the various forms of information and communication technology ( ict ) - based models, including banking correspondents ( bcs ). about 74, 000 such unbanked villages have been identified and allotted to various banks through state level bankers committees ( slbcs ). as at the end of september 2011, as reported by the state level bankers ’ committees of various states / union territories, banking outlets have been opened in 42, 079 villages across the various states in the country. this comprises of 1127 branches, 39998 business correspondents and 954 other modes like rural atms, mobile vans etc. in addition, the reserve bank of india has advised banks to roll out the financial inclusion plans ( fip ) for drawing up an action plan to provide banking facilities in villages with population less than 2000 through multiple channels. ( ii ) need for venture / risk capital venture / risk capital is often a more appropriate financing instrument for high - growthpotential and start - up smes. although msmes commonly use traditional debt, this type of financing is often not accessible for fast - growth and start - up firms. during their initial phase, firms need finance to study, assess and develop an initial concept ( seed phase ) or for product development and initial marketing ( start - up phase ). at this stage, firms may be in the process of being set up or may exist, but have yet to sell their product or service commercially. high - growth firms usually develop an idea, concept or product that requires an incubation period before generating revenues and profits. firms, typically, look for venture capital to provide them with the financing they need to expand or break into new markets and grow faster. thus, the ability of msmes ( especially those involving innovations and new technologies ) to access alternative sources of capital like angel funds / risk capital needs to be enhanced considerably.

therefore by definition meet with less of a monetary policy response than it would if monetary policy had been national. furthermore the nature of the political set - up makes it more difficult for the ecb to comment on individual national budgets. this means there will be a strong temptation to “ free ride ” by expanding the budget at the expense of fellow european nations. but the dilemma goes further - given that it is rational for others to expand their budgets it becomes rational for your own country to do so too - even if your instinct is not to “ free ride ”. otherwise you might rationally expect to end up among the small minority that does not expand and at the same time still have the tighter monetary policy that results from everyone else expanding. this is the classic “ prisoner ’ s dilemma ” from game theory. the conclusion is that it is necessary to have rules for fiscal policy that limit deficits and debt when monetary policy is united and fiscal policy divided, and that these rules need to be followed. but the conclusion is also that the pressure to over - expand is as strong during an upturn as during a downturn. in fact this is what we have seen in the euro zone during the heyday of the late 1990s - a much too expansionary fiscal stance in some euro zone countries, which led to tighter monetary policy and thus an incentive for others to weaken fiscal discipline. the euro zone then started the downturn with large deficits, considering the earlier boom, instead of surpluses. what the pact then required, a 180 - degree turnaround in fiscal policy to a tighter stance, reinforcing the downturn, was considered by some as stupid. in fact it was the lack of savings during the boom that was stupid. thus, we would need rules not only like the stability pact, for a maximum deficit in a downturn, but equally some forceful rule for fiscal rectitude in good times. those rules are difficult to state as clearly as the 3 per cent limit, but one way ahead could be to define annual targets for actual net lending based on the predicted output gap. but why didn ’ t we see these problems from the beginning? perhaps because we were fortunate to have something that can work as a temporary replacement for rules : clear objectives, strong leadership and the market as a quickly reacting judge. this existed not so long ago in europe. the objective was to join the euro zone and achieve the convergence criteria. the leadership was provided by germany both in terms of its economic size