surrounds that outlook. in the financial markets, we are in the midst of a massive restructuring of credit flows and adjustment of risk premiums. after the recent experience, there is likely to be less reliance on securitization markets to intermediate credit flows and more reliance on banks and other intermediaries. but those intermediaries are still rebuilding the capital and liquidity positions they need to substantially increase their participation in credit markets. as i noted, we have taken important policy steps to support financial institutions and markets and to restart the flow of credit. indeed, risk spreads in both short - term and long - term markets have narrowed since late last year, and equity prices, after a sharp decline earlier this year, have rebounded substantially in recent weeks. however, financial markets continue to be fragile, many risk spreads are still elevated, and investors appear to remain uncertain about the strength of some financial institutions. some of the government programs i have discussed – those to restart markets, provide additional capital buffers, and open outlets for legacy assets – are just now being implemented. while these programs are promising, we will not be able to judge their success for a time. thus, i suspect that credit conditions will ease only slowly and will continue to exert restraint on spending for a time. the sharp drop in consumer spending since the middle of last year has been reflected in a noticeable upturn in the personal saving rate, which now stands above 4 percent after fluctuating between 0 and 1percent for most of the period since 2005. i would not be surprised to see the saving rate rise somewhat further in coming quarters as the lagged effects of the steep declines in home values and equity prices over the past couple of years restrain spending relative to income. in addition, shoring up personal financial positions may trump a rebound in spending for a time – especially if unemployment continues to rise, as it did in the initial phase of the past two recoveries. confidence about future economic prospects will be a critical influence on people's willingness to spend. confidence took a major hit last fall, and my best guess is that it will recover slowly along with the financial markets and the economy. but once financial conditions stabilize, the economy regains its footing, and households sense that better prospects lie ahead, confidence could rebound more vigorously, leading to a more rapid pickup in purchases at that point. business fixed investment has also fallen sharply since last fall, and it is likely to remain weak through the remainder of 2009. indeed

a few manufacturing corporates from india are now rated globally best, rbi intends to be similarly the best. needless to say we expect indian accounting profession to be among the world's best, if it is not already so in any specific aspect. many of you would be aware that rbi has been making pro - active efforts to facilitate positioning of international financial standards and codes in relevant areas of the financial system in india. as part of this process and to guide the overall process of implementation of appropriate changes in respect to various segments of the financial system, the rbi had, in consultation with government of india, constituted a standing committee on international financial standards and codes in december 1999. the standing committee, in turn, constituted advisory groups in ten core subject areas pertaining to the financial system, broadly encompassing the key areas prescribed by financial stability forum. out of these, the advisory group on accounting and auditing ( chairman : shri y. h. malegam ) compared the indian standards and relevant statutes with international standards and made recommendations for reducing the gap. in this regard, it is heartening to observe that the accounting and auditing standards in india are being increasingly benchmarked against international standards. i am also happy to note that the icai is making sustained efforts to align the indian accounting standards with the international ones. a review of the recommendations of the advisory group by the reserve bank in december 2004 shows that the gap between international accounting standards and indian accounting standards has been gradually narrowing, reflecting the foresight of the profession in recognising the importance of international comparability. as my remarks would testify, the relationship between the rbi and the icai has been mutually reinforcing, where both can draw on each other ’ s strengths and contribute to an efficient and stable financial system. i am happy to state that we have decided to constitute a small group comprising the representatives of the rbi and the icai who can meet at regular intervals and sort out pending issues relating to standardisation of audit formats, concurrent audit of banks and empanelment of auditors as well as implementation issue on certain accounting standards. before concluding, let me say a few words on the role of auditors in economic reforms. while the reform process had largely emphasised the need for improving the balance sheets, it is very critical that these measures really get reflected in the financial statements and present a true and fair view of the financial position of all entities. the reform process would be evidently incomplete if the balance sheet integrity is not