account and given that market forces play a predominant role in determining external value of the rupee, there has not been large volatility in this market barring few mild episodes related to turbulence in global markets. daily exchange rate volatility in rupee had been in the range of 1. 6 to 4. 7 per cent during 2001 to 2006 as compared to 7. 5 in 1993 - 95. it is lower than most of the emerging economies. computed from monthly neer and reer indices, volatility in indian market is one of the lowest in the world. reform measures enhanced depth and liquidity in the market reflected in rising turnover and moderation in bid - ask spread over the years. there has been more than four - fold rise in total annual turnover in foreign exchange market from us $ 1. 3 trillion in 1997 - 98 to us $ 5. 7 trillion in 2006 - 07. capital market like other market segments, there have been far reaching changes in both the primary and secondary market segments of capital market. primary market witnessed a significant movement away from cci regime imposing primary issuance at sub - market rates to free pricing and book - building system along with mandatory disclosures as prescribed by sebi. in the secondary market, corporatisation of exchanges, screen based trading replacing open outcry system, introduction of options and futures replacing erstwhile badla system, rolling settlement replacing 14 - day settlement cycle, dematting of securities with depository system created state - of - the art infrastructure comparable to best international practice. this not only integrated stock markets across the country, capital market became far more efficient as could be observed in terms of various parameters. there has been sharp increase in liquidity as observed from fall in impact or transaction cost by more than 50 per cent and rise in turnover ratio from 20. 3 per cent in 1991 - 92 to a peak level of 409. 3 in 2000 - 01 before moderating to 81. 8 per cent in 2006 - 07. similarly, in terms of market stability, volatility declined from 3. 3 in 1992 to 1. 1 in 2005. credit market prior to reforms, banking operations both on the assets and liabilities side were governed by the guidelines set out by the regulator. with guidelines that ensured banks ’ margin on cost plus basis, competition was virtually absent with no incentive to cut cost, raise efficiency or upgrade credit assessment skills. while, broad approach to reforms in this market has been to bring

in modernising its education system in recent years and its gross enrolment ratio is almost approaching twice that of india. way forward our discussion of process of transformation, its achievements as well as failures do throw up some issues which need to be addressed to ensure that economic progress is sustainable and it is percolating downwards for the benefit of the masses. agricultural investment while structural transformation from agriculture to services led growth is a positive feature, corresponding movement in terms of population dependent on respective sectors has not occurred. the share of agriculture in total income has dropped to 17 per cent ; still more than 60 per cent of population continues to draw its livelihood from this sector. this workforce also accounts for sizeable proportion of poor in the country. there is an urgent need to enhance investment in this sector not only to raise crop productivity, but also to create employment opportunities outside the farming. there is a need to effectively integrate rural sector with urban economy by creating needed infrastructure viz., roads in rural areas ; electricity ; major and minor irrigation projects ; and cold - storage chains to provide farm producers access to urban markets. besides, there is also a requirement felt for bringing legal reforms with regard to tenancy rights that would give a boost to contract farming and higher productivity in farming activity particularly when individual farm size is rapidly dwindling. labour reforms the topic of labour laws reforms in india has always been a matter of debate. the issue here is not to argue whether the indian labour laws are rigid or liberal, but to find out whether the existing laws are helping in bringing market efficiency and productivity. we have to analyse whether the present laws are encouraging and promoting the growth of the entrepreneurs, creating a positive investment environment and opportunities. there is a need to ensure relativity in the rights of management and workers to promote healthy milieu for growth and progress. a liberal exit policy can only coexist with generous unemployment, retraining benefits and severance pay. one may also need to examine and rationalise some extant labour regulations and provisions. for instance, let us see the pension laws where the workers get the right of pension only after having devoted a minimum numbers of years in the job which in fact restrain them from availing the best opportunities in the market. the disparity between the organised and the unorganised sectors in terms of working condition and protection of employees ’ rights also needs to be bridged. there is a need to enhance protection of workers in the unorganised sector with provision of insurance, pension schemes