. private investment decelerated sharply, in part reflecting the global downturn, but largely owing to domestic factors. business profitability was dented by tightening infrastructure constraints and increasing input prices stemming from high food and fuel inflation. business confidence was hit by a rising fiscal deficit, vacillating commitment to reforms and governance concerns, all of which dampened investor perceptions on returns to investment. 18. on top of the decline in private investment, private consumption demand, which was the bulwark of the quick recovery from the crisis, too started slowing in recent years exacerbating the growth slowdown ( chart - 3 ). it is estimated to have slowed to 4. 1 per cent during the current year, down from an average of 8. 3 per cent in the previous two years. inflation 19. just as india recovered from the crisis sooner than other countries, inflation too caught up with us sooner than elsewhere. inflation, as measured by the wholesale price index ( wpi ), went briefly into negative territory for a few months in 2009 but started rising sharply thereafter, clocking a peak rate of 10. 9 per cent in april 2010. average wpi inflation was 9. 6 per cent in fiscal year 2010 / 11, 8. 9 per cent in 2011 / 12 and 7. 5 per cent during the first ten months of 2012 / 13 ( chart - 4 ). the story therefore is that at 8. 7 per cent, the average inflation over the last three years has been higher than the average inflation of 5. 4 per cent during the previous decade ( 2000 – 10 ) what is driving inflation? 20. both supply side and demand side factors have contributed to the buildup of inflationary pressures. 21. a major driver from the supply side has been food inflation, which has both structural and cyclical components. the structural component arises from rising incomes, especially in rural areas, which is leading to a shift in dietary habits from cereals to protein foods. inflation of protein food prices remained in double digits for much of the last three years barring a few months ( chart - 5 ). the cyclical component of food inflation arises from the monsoon related spike in prices of food items such as vegetables. notwithstanding all the talk of drought proofing the economy, the timely onset of the monsoon and its spatial and temporal distribution continue to influence the inflation outlook in india. 22. the second major factor driving the current episode of inflation has been global commodity prices, especially the price of

to cyber incidents, natural disasters, frauds or human error, can have far - reaching consequences for banks, highlighting the need for enhanced operational resilience, backup and recovery testing as well as contingency planning. 1 / 4 bis - central bankers'speeches the dynamics of traditional risks have also changed. for instance, one notable consequence of the digital revolution coupled with wider adoption of social media, is the acceleration of liquidity runs. what used to take days to unfold can now happen in mere hours, all thanks to the pervasive influence of the internet and social media. the incidents of march 2023 in the united states serve as a stark reminder of this reality. as you would recall, a name mix - up of the us bank with a major ucb in india, fuelled by social media misinformation, required a press clarification from the ucb, to quell the rumours. with this dynamic environment, the focus of regulation and supervision is shifting towards activity based. similar activities having similar risks need to have the same level of regulatory and supervisory oversight, albeit with an element of proportionality to factor the scale and complexity of operations. therefore, regulations for cooperative banks are becoming harmonised with that for commercial banks, but with certain calibrations wherever required. the expectations from ucbs, especially for corporate governance and effectiveness of assurance functions, are much higher now. as some of our recent enforcement actions would have demonstrated, there is now zero tolerance for poor corporate governance practices such as loans to directors or their relatives. expectations from heads of assurance from cyber threats to regulatory changes, and from economic uncertainties to technological advancements, ucbs must adapt and stay vigilant, if they are desirous of retaining their relevance in this fast - changing world. this is where risk management, compliance and internal audit, come into play. they need to work hand in hand, identifying, assessing, and mitigating these risks, ensuring that their bank remains resilient and prepared for whatever challenges lie ahead. therefore, as heads of assurance, you must ensure that you and your teams remain abreast of all the latest developments. this should be used to proactively update your systems and practices so that you remain ahead of the curve. risk management risk management is at the heart of banking. amidst all the complexities and advancements of finance, we should not forget the timeless wisdom of basic principles of banking such as diversification of risks and pr