in the country has risen sharply by two and a half times since 2010. the flow of resources to the commercial sector in india almost doubled from ₹12 lakh crore in fy 2012 to ₹22 lakh crore in fy 2022. 7 while banks continue to be a dominant source of financing, market borrowings8 of the commercial sector increased from ₹74, 000 crore in fy 2012 to ₹3, 16, 000 crore in fy 2022. as our economy and financial markets grew, the integration with the world economy and global financial markets has also risen. the growing economy and our aspirations to be and remain among the fastest growing economies has expanded our funding needs. all these necessitate larger and deeper financial markets. the policy response to headwinds 9. it is relevant to look at some of our policy responses in recent times, especially to major global headwinds. each successive episode of turmoil over the last decade and half has posed a specific set of challenges for the economy. each has warranted a specific response. 10. in 2008, policy actions were aimed at ensuring comfortable system liquidity ; augmenting forex reserves and maintaining a crisis management framework to support the economy through the global financial crisis. conventional tools such as policy interest rates and source : ministry of statistics and programme implementation source : ministry of statistics and programme implementation, rbi balance of payment statistics source : world bank source : reserve bank of india source : rbi handbook of statistics market borrowing includes public & rights issues by non - financial entities, gross private placements by non - financial entities and net issuance of commercial papers subscribed to by non - banks. cash reserve ratio ( crr ) were used. measures to manage forex liquidity included, inter alia, relaxing the interest rate ceiling on foreign currency deposits by non - resident indians and external commercial borrowings ( ecb ) for corporates. unconventional measures included a rupee - dollar swap facility for indian banks, a refinance window for mutual funds and a special purpose vehicle for supporting nonbanking financial companies. 11. post the announcement of early taper of quantitative easing by the federal reserve in 2013, the need for restoring confidence of market participants and containing the pressure on the rupee guided the reserve bank ’ s policy responses. monetary conditions were tightened through unconventional tools. forex market measures included both direct intervention and administrative measures to manage capital flows. these included import restrictions of nonessential items, opening of a special

s assesses the outlook for price inflation and sets interest rates. since 1997, labour costs have increased annually by between 5 and 7 per cent. in spite of this, consumer price inflation has been close to 2½ per cent over the past few years. the krone exchange rate has appreciated as a result of a wider interest rate differential between norway and other countries. combined with low growth abroad and increased trade with low - cost countries such as china, this led to a slower rise in import prices. in norway, voluntary export restraints on clothing have been removed and tariffs on clothing have been reduced considerably. in the eu and the us, a similar tendency has not been seen to the same extent. this may explain why prices for clothing have fallen in norway relative to the eu and the us. however, there is still a long way to go before restrictions on clothing imports to norway are entirely dismantled. for example, there is a duty today on imported children ’ s clothing and on shirts, suits, jackets and trousers for men and boys. as the world economy recovers, import price inflation will edge up. a rise in labour costs of more than 5 per cent will then only be consistent with the inflation target if the krone continues to appreciate. in the long run, wages must be compatible with the value added that is generated by workers, i. e. labour productivity. over time, the increase in real wages is therefore determined by developments in labour productivity. in norway, productivity growth has averaged 1½ - 2 per cent over the last 20 years. if this continues to be the case, an increase in nominal labour costs of around 4 - 4½ per cent in the long term will be consistent with the inflation target. there is an important interaction between monetary policy and fiscal policy. according to the guidelines for fiscal policy, petroleum revenues are to be phased in approximately in pace with the expected real return on the government petroleum fund. this guideline implies that fiscal policy will contribute to stimulating aggregate demand in the norwegian economy every year for many years ahead. the guideline also implies that the use of petroleum revenues will increase as long as the petroleum fund is expanding. variations in oil prices are accompanied by considerable fluctuations in government petroleum revenues from one year to the next. it is important to prevent these fluctuations from spilling over to the mainland economy. public expenditure and taxes that vary in relation to oil prices would result in an unstable economic environment. financial markets would be marked by uncertainty and turbulence, with an increase in