or ajay is strong ” – what do you make of such statements. it will make sense when we compare with some benchmark or measure and quantify it. only then do we know what is tall or what is strong. then things become precise. b. suppose your parents tell you, “ you have to study very hard ” or “ you have to study very very hard ” – do these sentences make much sense? yes, they certainly make. but, i am sure, “ you have to get 80 % marks ” is something which will give you greater focus as the goal is unambiguously stated. mathematical concepts like measurement, which were applicable earlier only to physical sciences, are now being made use of in social as well as biological sciences too. 10. turning to more formal discussion, one of the important features of a scientific investigation is its fixation with putting numbers to things, by quantification using mathematical formulae. often, scientific work is judged more by the quality of its mathematics than by its empirical content. let me quote what james clerk maxwell said “ all the mathematical sciences are founded on relations between physical laws and laws of numbers, so that the aim of exact science is to reduce the problems of nature to the determination of quantities by operations with numbers ”. 11. let me cite some classical examples. ( i ) first one relates to modeling of astronomical data, whereby you may recall how logarithmic tables were found useful for analyzing centuries of astronomical observations collated by tyco brahe and put to use by johannes kepler to form the basic laws of planetary motion in the early 1600s. kepler ’ s three laws of planetary motion are : ( i ) the path of the planets about the sun is elliptical in shape, with the center of the sun being located at one focus ( the law of ellipses ). ( ii ) an imaginary line drawn from the center of the sun to the center of the planet will sweep out equal areas in equal intervals of time ( the law of equal areas ) and ( iii ) the ratio of the squares of the periods of any two planets is equal to the ratio of the cubes of their average distances from the sun. ( the law of harmonies ). it is the third law that involves difficult exponentiation of squares and cubes, which does not yield easily to the naked eye when the actual data are observed. many would know how later newton ’ s universal law of gravitation could be found equivalent to

that all deductions are to be adjusted against equity which hitherto were distributed equally between tier i and ii. the quantitative impact study published in december 2010 by bcbs of 91 large banks ( including 3 from india ) showed a shortfall of euro 165 bn and euro 577 bn in equity component vis - a - vis 4. 5 per cent and 7 per cent ratios, respectively. this is one of the reasons for an extended timeframe for implementation of basel iii from january 1, 2013 to january 1, 2019. the other reason is to cushion the slowdown in the gdp growth during the transition period on account of much larger capital requirements. according to a study conducted by the macroeconomic assessment group ( mag ), a group of modelling experts formed by the fsb and bcbs, while banks may attempt to raise lending rates and reduce credit growth during transition to higher capital levels, this is likely to have a modest impact on the real economy. the maximum decline in gdp over baseline forecast would be 0. 22 per cent after 35 quarters ( 0. 03 per cent per annum while the additional capital is being built up ) followed by gdp recovery towards trend path. longer transition period would result in lower costs because, banks will get longer time to build up capital from internal generation and thus there will be a less need to cut back on lending or to raise fresh capital from the market. the private sector estimate done by institute of international finance ( iif ) is, however, much higher. as regards india, our estimate is that transition at system level would not be much of an issue as all capital ratios currently are above the minimum requirement of basel iii though a few banks may come under pressure. moreover, the capital requirement on account of increased coverage of risks would not be so material for indian banks as either those activities are not allowed ( i. e. resecuritisation ), or their magnitude is quite small ( i. e. trading book ). the stress point, however, would be that banks will be required to adjust the unamortised portion of pension and gratuity liabilities in the opening balance sheet on april 1, 2013 on transition to ifrs. however, going forward, the capital requirements including equity are likely to be substantial for supporting the high gdp growth and the fact that credit to gdp ratio, which is currently quite modest at about 55 per cent, is bound to increase substantially on account of structural changes in the economy i. e., financial