a long - awaited pickup in the growth of labor productivity began to show through more strongly in the data ; and this accelerated increase in output per hour has enabled firms to raise workers ’ real wages while holding the line on price increases. gains in productivity usually vary with the strength of the economy, and the favorable results that we have observed during the past two years or so, when the economy has been growing more rapidly, almost certainly overstate the degree of structural improvement. but evidence continues to mount that the trend of productivity has accelerated, even if the extent of that pickup is as yet unclear. signs of major technological improvements are all around us, and the benefits are evident not only in high - tech industries but also in production processes that have long been part of our industrial economy. those technological innovations and the rapidly declining cost of capital equipment that embodies them in turn seem to be a major factor behind the recent enlarged gains in productivity. evidently, plant managers who were involved in planning capital investments anticipated that a significant increase in the real rates of return on facilities could be achieved by exploiting emerging new technologies. if that had been a mistake on their part, one would have expected capital investment to run up briefly and then start down again when the lower - than - anticipated rates of return developed. but we - 5have instead seen sustained gains in investment, indicating that hoped - for rates of return apparently have been realized. notwithstanding a reasonably optimistic interpretation of the recent productivity numbers, it would not be prudent to assume that even strongly rising productivity, by itself, can ensure a non - inflationary future. certainly wage increases, per se, are not inflationary, unless they exceed productivity growth, thereby creating pressure for inflationary price increases that can eventually undermine economic growth and employment. because the level of productivity is tied to an important degree to the stock of capital, which turns over only gradually, increases in the trend growth of productivity probably also occur rather gradually. by contrast, the potential for abrupt acceleration of nominal hourly compensation is surely greater. as i have noted in previous appearances before congress, economic growth at rates experienced on average over the past several years would eventually run into constraints as the reservoir of unemployed people available to work is drawn down. the annual increase in the working - age population ( from 16 to 64 years of age ), including immigrants, has been approximately 1 percent a year in recent years. yet employment, measured by the count of persons who are working rather than by the count of

core inflation ) has softened by around 130 basis points from its recent peak in january 2023. although it is still elevated at 4. 9 per cent, this steady easing of core inflation over the last five months is indicative of the ongoing transmission of monetary policy. 14. looking ahead, the spike in vegetable prices in july is starting to see a correction, led by tomato prices. new arrivals of tomatoes in mandis are already softening prices, coupled with proactive supply management in the case of onions. we expect to see an appreciable slowdown in vegetable inflation from september. meanwhile, the prospects for kharif crops have improved, thanks to the progress of the monsoon in july, although the cumulative rainfall has again moved into the deficit territory. 6 the outlook for cereal prices has accordingly brightened, supported by active supply side interventions. sudden weather events, el nino conditions and renewed geopolitical tensions, however, impart uncertainty to the food prices outlook. as i noted in my monetary policy statement on august 10, 2023, given the likely shortterm nature of the vegetable price shocks, monetary policy can await the dissipation of the first - round effects of such shocks that may produce short - lived spikes in headline inflation. we will remain on guard to ensure that second order effects in the form of generalisation and persistence are not allowed to take hold. the frequent incidences of recurring food price shocks pose a risk to anchoring of inflation expectations, which has been underway since september 2022. we will remain watchful of this also. the role of continued and timely supply side interventions assumes criticality in limiting the severity and duration of such shocks. in these circumstances, it is necessary to be watchful of any risk to price stability and act appropriately and in time. we remain firmly focused on aligning inflation to the target of 4. 0 per cent. 6 the cumulative south - west rainfall 7 per cent below normal as on august 21, 2023. building blocks for a sustainable future 15. having provided a snapshot of the current context, i would now like to turn to the certain thrust areas that can propel india forward over the next 25 years. the potential is huge for india to raise its growth trajectory and improve the general well - being of the people. in this context, i would like to focus on six key areas that can provide the required growth momentum. they are ( i ) agriculture ; ( ii ) manufacturing ; ( iii ) services ; (