instrument in different macroeconomic conditions. the reserve bank ’ s policy on exchange rates has been articulated as broadly noninterventionist, except when confronted with excessively volatile, lumpy or disruptive flows. this is an approach consistent with the notions of “ flexibility ” or “ constrained discretion ” used earlier in the context of boundary conditions for traditional approaches to monetary policy. these are, essentially, boundary conditions, which would presumably trigger some deviation from normal policy if abnormal circumstances were to arise. what would constitute abnormal conditions, of course, cannot be explicitly indicated but will presumably be defined by specific circumstances in which actions are taken. concluding remarks in this talk, i have tried to provide a sense of the choices, dilemmas and constraints facing central bankers as they attempt to navigate their economies out of the crisis. in the process, some traditional positions on monetary policy and central banking activity may have been reinforced, while some new thinking on mandates and instruments may have emerged. clearly, these are issues for which analytical foundations need to be strengthened or even developed from scratch to enable an internally consistent view of policy choices in different circumstances. central bankers will obviously be avid consumers of these intellectual developments. but, even as that process unfolds, there are some important messages to be extracted from the thoughts and articulation of practitioners. let me conclude with what i believe to be three key messages. first, the crisis has not in any way undermined the core objectives and approaches of monetary policy, i. e., the use of conventional interest rate and liquidity instruments to address commodity price and output stability, with whatever weights may be assigned to the two objectives. what it has done is to make the case for flexibility in deviating from a set path when confronted with shocks. this essentially suggests that a standard approach be followed in normal times but deviations are legitimate when times turn abnormal ; of course somebody has to decide when this occurs. defining and quantifying “ abnormality ” is clearly an important analytical requirement to make this judgement more reliable. second, even as the boundaries of normality are being approached or breached, it is difficult to see responses being confined to traditional instruments or, for that matter, traditional structures. as far as financial stability is concerned, the analytics supporting the use of conventional monetary instruments may be advancing, but there is still a strong contrary view. what is being recognized is that, even though these instruments may contribute, prudential measures may be a more efficient way to address the

. alongside, the current account deficit remains within sustainable levels, other indicators of external viability such as the ratios of indebtedness to gdp and / or reserves are also reflecting a healthy improvement. the government has pursued the path of fiscal consolidation and the ratio of public debt to gdp is gradually declining. international investors have warmed to where the indian economy is currently positioned and this is reflected in sizeable foreign investment inflows. meanwhile, domestic financial markets have shown resilience and stability in spite of escalation of global geo - political uncertainty and heightened volatility in financial markets. these developments have enabled the build - up of “ buffers ” against unforeseen shocks. 5. taming the non - performing assets problem : a landmark development relating to resolution of stressed assets is the insolvency and bankruptcy code ( ibc ) 2016. from the reserve bank ’ s point of view, a great enabler in this context has been the banking regulation ( amendment ) ordinance promulgated in may and subsequently enacted in august this year. by the authority it conferred on the reserve bank to issue directions to banks to initiate resolution processes, it scales up the ability of the reserve bank to deal decisively with stress in banks ’ balance sheets and unclog the flow of credit to grease the wheels of growth. in the year ahead, we must seize this opportunity to overcome the debilitating problem of corporate loan delinquency and get our banks back into the mainstream of financial intermediation. the recently chalked out recapitalisation plan of the government for public sector banks will ensure that flows to productive sectors ( and credit - worthy borrowers ) are not impeded and growth impulses are 1 / 4 bis central bankers'speeches nurtured. the government has also proposed to take steps to improve the corporate governance of psbs by strengthening boards, bringing objectivity into management appointments, and decentralising decisions to the professional board. 6. the risk - based supervisory process of the reserve bank keeps flagging the risks in the balance sheet of banks which are taken up with the institutions concerned for remedy. previously, effective enforcement action on the specific violations / breaches has been a gap in implementation. the new enforcement department was established in april this year for this function ; viz., concentrate on its mandate to develop a rule based, consistent framework to deal with breaches of law, rules and directions. effective deterrence enforced through such actions is expected to contribute