0 - 25. 0 per cent in 2007 - 08 from the average of 29. 8 per cent over 2004 - 07. the fiscal position of the government, both central and states, is undergoing consolidation in terms of targeted reduction in fiscal deficit indicators. the improvement in the fiscal position of several states is particularly impressive, which augurs well for the sustained growth of the economy and lower inflation. the union budget for 2007 - 08 has placed the fiscal deficit at 3. 3 per cent of gdp for the year 200708, as against 3. 7 per cent in the previous year, in keeping with the spirit of the frbm act, 2003. way forward – challenges and strengths there are, undoubtedly, many challenges for the indian economy, but it is useful to focus on more urgent of these. first, the poor state of the physical infrastructure, both in terms of quantity and quality is considered by many to be the most critical hindrance for india ’ s progress. the most important issues here are regulatory framework and overall investment climate, which are being addressed by the government. second, the most complex and challenging issue relates to development of agriculture. while over 60 per cent of the workforce is dependent on agriculture, the sector accounts for barely 20 per cent of the gdp. further, the gdp growth generated from agriculture is only marginally above the rate of growth of the population, which is not adequate to ensure rapid poverty reduction. the results of recent surveys on poverty in india, however, provide grounds for some optimism in regard to accelerated reduction in absolute poverty since the reform period. third, delivery of essential public services such as education and health to large parts of our population is a major institutional challenge. it is strongly felt that education will empower the poor to participate in the growth process and the large gaps in availability of health care, in terms of minimum access to the poor, need to be filled. there are reasons to believe that these challenges will be met, with some assurance of success, on account of many inherent strengths in the indian society. i will narrate a few of these, relevant to this gathering. first, india is a country of great diversities but with incredibly harmonious co - existence of various religions, languages and a unified culture. the familiarity with multiple languages in india prepares the people to adapt better to multi - lingual environment, making it easier for them to fit into international systems very smoothly. also, a vast and growing pool of science and technology graduates and the millions

the bank on borrowings from inter bank market all structured actions as in earlier zone discussion by rbi with the bank ’ s board on corrective plan of action rbi will order recapitalisation bank will not increase its stake in subsidiaries bank will revise its credit / investment strategy and controls all structured actions as in earlier zone discussion by rbi with the bank ’ s board on corrective plan of action bank will not enter into new lines of business bank will permissible under the br act, 1949 • impose restrictions on directors ’ or management compensation, as applicable. • • in addition to mandatory actions of threshold 1, restriction on branch expansion ; domestic and / or overseas higher provisions as part of the coverage regime • • bank / govt. to take steps to bring in new management / board bank will appoint consultants for business / organisational restructuring bank / govt. to take steps to change promoters / to change ownership rbi / govt. will take steps to merge the bank if it fails to submit / implement recapitalisation plan or fails to recapitalise pursuant to an order, within such period as rbi may stipulate capital related • detailed board level review of capital planning • submission of plans and proposals for raising additional capital • requiring the bank to bolster reserves through retained profits • restriction on investment in subsidiaries / associate s • restriction in expansion of high risk - weighted assets to conserve capital • reduction in exposure to high risk sectors to conserve capital • restrictions on increasing stake in subsidiaries and other group companies credit risk related • preparation of time bound plan and commitment for reduction of stock of npas • preparation of and commitment to plan for containing generation of fresh npas • strengthening of loan review mechanism • restrictions on / reduction in credit expansion for • capital risk threshold 3 • • • reduce / skip dividend payments bank will not increase its stake in subsidiaries all structured actions as in earlier zone rbi will observe the functioning of the bank more closely rbi / govt. will take steps to merge / amalgamate / liquidate the bank or impose moratorium on the bank if its crar does not improve beyond 3 % within one year or within such extended period as agreed to. in addition to mandatory actions of threshold 1, restriction on branch expansion ; domestic and / or overseas restriction on management compensation and directors ’ fees, as applicable _ borrowers below certain rating grades • reduction in risk assets • restrictions on / reduction in credit expansion to unrated borrowers • reduction in unsecured exposures • reduction in loan concentrations