inventories seems to be behind the typical schedule. the colder - than - average winter played a role in producing today ’ s tight supply situation as did the inability of heightened gas well drilling to significantly augment net marketed production. canada, our major source of gas imports, has little room to expand shipments to the united states. our limited capacity to import liquified natural gas effectively restricts our access to the world ’ s abundant supplies of natural gas. the current tight domestic natural gas market reflects the increases in demand over the past two decades. that demand has been spurred by myriad new uses for natural gas in industry and by the increased use of natural gas as a clean - burning source of electric power. on balance, recent movements in energy prices seem likely to be a favorable influence on the overall economy. in the short run, lower energy bills should give a boost to the real incomes of households and to business profits. to be sure, world energy markets obviously remain susceptible to politically driven supply disruptions, as has been evident recently from the events in venezuela and nigeria. but, even taking account of these risks, futures markets project crude oil prices to fall over the longer run, consistent with the notion that current prices are above the long - term supply price of oil. as has been the case for some time, the central question about the outlook remains whether business firms will quicken the pace of investment now that some, but by no means all, of the geopolitical uncertainties have been resolved. a modestly encouraging sign is the backlog of orders for nondefense capital goods excluding aircraft, which has been moving up in recent months. moreover, recent earnings reports suggest that the profitability of many businesses is on the mend. that said, firms still appear hesitant to spend and hire, and we need to remain mindful of the possibility that lingering business caution could be an impediment to improved economic performance. one new uncertainty in the global economic outlook has been the outbreak of severe acute respiratory syndrome ( sars ) in southeast asia and elsewhere. this epidemic has hit the economies of hong kong and china particularly hard, as tourism and business travel have been severely curtailed and as measures to contain the spread of the virus have held down retail sales. to date, the effects of sars on the u. s. economy have been minimal. airlines have obviously suffered another serious blow, and some u. s. multinational corporations are reporting reduced foreign sales. but the effects on

sector in rural / local areas. the fourth segment may consist of digital players who may act as service providers directly to customers or through banks by acting as their agents or associates. the reoriented banking system will of course be characterised by a continuum of banks. the banking space would also include both traditional players with strong customer base and new technology led players. 16. in the context of the emerging scenario, a properly worked out consolidation of public sector banks can generate synergies in allocation of workforce and branches as well as streamlining of operations to meet the future challenges. the focus has to be on ushering in significant improvements in efficiency and rationalisation of scarce capital to meet the capital adequacy requirements. investments in technology and skill building has to be stepped up. bigger and agile banks may be able to reposition themselves with better branding exercises, backed by improved technology, skills and business models. 17. ultimately, the strength of a banking system depends on the strength of its corporate governance that fosters a robust and ethics - driven compliance culture. in this context, the reserve bank has been issuing instructions on corporate governance. for example, the compensation guidelines for whole time directors, ceos and material risk takers of banks have also been substantially modified. large - scale divergences and frauds observed across banks 3 / 6 bis central bankers'speeches raises questions on the role and effective utilisation of internal control systems within banks to identify areas of emerging risks. the rbi has issued the revised guidelines on the concurrent audit system in banks, drawing from the recommendations of the expert committee under shri y. h. malegam. the guidelines are aimed at strengthening the internal control functions enjoining greater responsibility on the audit committees of the boards while providing them greater leeway. besides, rbi would also issue draft guidelines on corporate governance in banks, as indicated in our annual report and reiterated in the report on trends and progress of banking in india 2018 – 19 published in august 2019 and december 2019 respectively. digital disruptions 18. besides structural changes, digital disruptions will continue to transform the banking sector. initiatives undertaken by the government, the reserve bank and the industry have led to a radical shift towards ubiquitous digitization, which has provided an impetus to adoption of technology. there is a unique confluence of several positives like demographic dividend, jam trinity, etc., that would further support rapid digitisation of financial services in india. 19. with inroads into their traditional businesses, banks are