- ground stocks fell from about 30 per cent in 1996 to 23 per cent in 2000. the central banks across the world were holding about 33, 000 tonnes as at the end of 2000 as compared to about 36, 000 tonnes at the beginning of 1991, which reflects substantial sale by many european central banks. the reserve bank of india ( rbi ) holds 357. 75 tonnes of gold forming about 6 per cent of the current value of its total forex exchange reserves. our reserves management as regards gold can be termed as passive and conservative as rbi does not sell gold or trade in gold. recent developments in india wgc has estimated that the annual indian demand for the precious metal in recent years has been in excess of 800 tonnes. most of it appears to be meant for jewellery fabrication, and the rest, estimated at 10 to 15 percent, is possibly meant to meet demand on account of investment and industrial processes. a major step in the development of gold markets in india was the authorization in july 1997 by the rbi to commercial banks to import gold for sale or loan to jewellers and exporters. initially, 7 banks were selected for this purpose on the basis of certain specified criteria like minimum capital adequacy, profitability, risk management expertise, previous experience in this area, etc. the number of banks later went upto 18. on a review, since five banks had not evinced adequate interest in this business in terms of activity, the rbi did not find it appropriate to renew their licences for this purpose. at present, 13 banks are active in the import of gold. the quantum of gold imported through these banks has been in the range of 500 tonnes per year. import of gold by banks authorised by the rbi has succeeded to a large extent in curbing illegal operations in gold and in foreign exchange markets. it has also resulted in reducing the disparity between international and domestic prices of gold from 57 per cent during 1986 to 1991 to 8. 5 per cent in 2001. the import duty on gold, which was rs. 220 per ten grams upto january 1999, was increased to rs. 400 per ten grams, and with effect from april 2001 has been reduced to rs. 250 per ten grams. the estimates of duty realised from gold imports indicate an annual amount varying from about rs. 1, 000 to rs. 2, 000 crore per annum since 1997. even though the country consumes more than 800 tonnes of the metal every year, the system of assaying and

a wide range of asset prices, to be forward - looking in its aim of maintaining low and stable inflation, and to be ready to respond to changes in the signposts. the remarkable degree of stability that the uk economy has enjoyed over the past decade has been less evident over the past twelve months. growth slowed and inflation rose above target. but after a period driving along a smooth new highway, a change to a more challenging road surface does not, as i said recently to the house of lords economic affairs committee, mean that the wheels are coming off the economy ; rather, it tells us that there are somewhat more and somewhat larger bumps on the road. monetary policy can try to avoid some of the worst bumps, but it cannot ensure a flat road surface. nevertheless, growth has picked up and inflation has fallen back close to its 2 % target. our central view remains one of steady growth and low inflation. but there are risks to that central view emanating from the rest of the world and we shall watch developments in world capital markets carefully. by keeping inflation close to the target, and so doing what it can to maintain economic stability, the monetary policy committee aims to allow you and other businesses to follow the signposts which guide a market economy. i cannot finish without reminding you that tomorrow is the 300th anniversary of the birth of benjamin franklin, arguably the greatest of the american founding fathers. during his lengthy stays in england, benjamin franklin visited kent many times. to celebrate his tercentenary the american brewing association has produced a new recipe for franklin ’ s favourite beer. the hops recommended for the recipe are kent goldings. despite the fears of the demonstrators on hop saturday in 1908, the kent hop industry has not disappeared altogether. the area under planting is certainly much smaller, but research in centres such as wye college has produced the new hedgerow hops which are recognised worldwide. employment in kent, though, has moved into new and more productive sectors. adapting to changes in the external environment is not easy for any of us - whether running a business or setting monetary policy - but if we do adjust the benefits will accrue, if not to everyone immediately then to the great majority over the years to come.