is the highest ever recorded after independence second only to china in the contemporary world. this has emanated from an upsurge in the domestic savings rate ( 23. 5 per cent in 2001 – 02 to 37. 7 per cent in 2007 – 08 ) supported by the step up in investment rate ( from 22. 8 per cent to 39. 1 per cent ) in an environment of moderate inflation and macro - economic stability. although the contagion from the global economic crisis had brought the growth down to 6. 7 per cent in 2008 – 09, large fiscal stimulus and accommodative monetary policy ensured that the economy performed better than expected in 2009 – 10. the planning commission in the eleventh five year plan document ( 2007 – 12 ) identified a number of priorities to hasten an inclusive growth process so that the economy can grow at a rate of around 9 per cent during the plan period. while the success of the same revolves around a number of wide ranging issues adequately flagged in the plan document, certain basic problems need to be addressed first. these are agriculture reforms, governance reforms and infrastructure reforms. in today ’ s address, i would confine myself to the third issue – that is infrastructure – finance as well as the beyond. role of infrastructure and the traditional constraints as regards finance 3. if we have to maintain high growth rate, we require better infrastructure ; as simple as that. infrastructure is also a key driver of inclusive growth. it is already identified as one of the serious impediments to high growth in india in the coming years. with fast pace of economic growth and urbanisation, availability of adequate facilities as well as upgrading the quality of existing infrastructure would assume paramount importance. infrastructure development in new townships is a priority to redistribute the influx of growing population. attention is to be paid to the rural infrastructure provision such as irrigation, electrification, roads, drinking water, sanitation, housing, community it service, etc. financial issues are often cited as the key constraint to the availability of provisions in an emerging economy like india. the infrastructure projects are characterised by non - recourse or limited recourse 4. financing, i. e., lender can only be repaid from the revenues generated by the projects requiring to the large scale of investments. the share of high initial capital and low operating cost in infrastructure projects explains why financing infrastructure involves a mix of complex and varied contractual arrangements. wrong projections, collection risks of the payables and

, this is not a settled issue. there is no onesize - fits - all answer, as is clear from the variety of regulatory models around. each country and each central bank will have to resolve this issue according to its specific circumstances. central banks and financial stability while there is broad agreement that financial stability is neither automatic nor inevitable, there is less agreement on whether it should be explicitly included in the mandate of central banks. one argument is that explicit inclusion would be redundant, because financial stability is a necessary – although not sufficient – condition for achieving the conventional central bank objectives relating to inflation, output, and employment. on the other hand, there is a growing view that unless financial stability is explicitly included in the mandate of central banks, it is likely to fall through the cracks. complicating matters, defining financial stability in a precise, comprehensive, and measurable manner is proving to be difficult. nevertheless, we now know that there are two attributes of financial instability : excessive volatility of macro variables such as interest rates and exchange rates that have a direct impact on the real economy ; and financial institutions and markets threatened by illiquidity to the extent of jeopardizing systemic stability. do central banks have the instruments to address the mandate of financial stability? one clear instrument for preserving financial stability is the lender - of - last - resort function. during the crisis, central banks pumped in enormous amounts of liquidity to unfreeze the system through the lender - of - lastresort window. while this made individual institutions liquid, the market remained illiquid, thereby revealing the limitation of the window instrument in combating illiquidity. a central bank can infuse liquidity, but it ’ s hard to ensure that the available cheap and abundant money is used to purchase assets whose value is rapidly eroding. the only option may be for the central bank to buy the assets. this means that the central bank must be not only the lender but also the market maker of last resort. these issues have yet to be clearly defined, let alone resolved. but they must be resolved soon. managing the costs and benefits of regulation to safeguard financial stability, the reserve bank of india used a variety of prudential measures, including specification of exposure norms and preemptive tightening of the risk weights attached to assets and the requirements for loss provisioning. but these measures often carry a cost. for instance, tightening risk weights arguably tempers the flow of credit