mitigate the domestic and external effects of financial crisis, particularly in large economies like china and india. fourthly, the impact of instability in times of crisis appears largely to be borne by the home or domestic public sector rather than the global private sector. avoiding crisis is ultimately a national responsibility. in such a milieu, the policy makers are often confronted with competing positions and need to make choices in the face of daunting dilemmas. concluding remarks in a recent survey of the world economy, the economist ( september 16, 2006 ) predicted that the emerging economies are set to give the world economy its biggest boost since the industrial revolution. a greater integration into the global system of production and trade, supported by buoyant capital flows, is driving a widening wedge between the emerging and the developed countries in terms of growth rates. already accounting for more than half of the world gdp, in purchasing power parity terms, they will raise their share to two - thirds of the global output in 20 years'time. it took 50 years for britain and america to double real income in the 19th century when they were industrialising ; china is achieving the same feat in nine years! over the next decade, almost a billion new consumers will enter the global marketplace, providing an enduring stimulus to economic activity across the world. in all humility, it needs to be recognised that despite soaring economic growth, real per capita incomes and therefore, standards of living in the developing countries remain well below those in the developed countries. as the bric report of goldman and sachs ( 2003 ) had thoughtfully projected, the average per capita income in america would still be three or four times higher than in china even in 2040. the imf has estimated that if india's relative per capita income rises by under 2 per cent, it will take more than a 100 years to close half the distance from the developed countries'per capita income levels. if india's per capita income grows by three per cent in real terms, it will still take 69 years to close half the gap. more important, faster growth alone will not automatically eradicate poverty ; it depends on how inclusive that growth is and how the benefits of globalisation are shared. the future will, in all likelihood, call for some radical thinking, perhaps new vistas of development in operational and institutional frameworks of monetary policy. so far, it is claimed, the emerging economies have made the work of monetary authorities a lot easier than before by subduing inflation both

, pds should reduce and in fact consider eliminating their access to the call money market. there is an opinion that such restrictions of access to call money in indian conditions would add to stability in financial markets and help develop term money market. a final decision would no doubt be taken after discussions in technical advisory committee on financial markets of rbi, and further consultations with market participants. liquidity adjustment facility rbi influences liquidity on a day - to - day basis through laf and is using this facility as an effective flexible instrument for smoothening interest rates. the operations of non - bank participants including fis, mutual funds and insurance companies that were participating in the call / notice money market are in the process of being gradually reduced according to pre - set norms. such an ultimate goal of making a pure inter - bank call money market is linked to the operationalisation of ccil and attracting nonbanks also into an active repo market. the effectiveness of laf thus will be strengthened with a pure inter - bank call / notice money market in place coupled with growth of repo market for non - bank participants. the laf operations combined with judicious use of omos are expected to evolve into a principal operating procedure of monetary policy of rbi. to this end, rbi may have to reduce substantially the liquidity through refinance to banks and pds. for example, if rbi intends to tighten the money market conditions through laf, the automatic access of refinance facility from the rbi to banks and pds may reduce the effectiveness of such an action and thereby cause transmission losses of monetary policy. it may be appropriate to note that in most of the developed financial markets, the standing facilities operate at the margin. at present rbi provides standing facilities comprising the support available to banks under collateralized lending facility ( clf ) and export credit facility to banks, and liquidity support to pds. one way of reducing the standing facility will be to eliminate clf from the standing facilities and reducing the present ratio of normal and back - stop facilities. the existing methodology of calculating eligible export credit refinance continues till march 2002 and rbi has expressed its intention of moving away from sector specific refinance. as crr gets lowered and repo market develops, the refinance facilities should also be lowered giving more effectiveness to the conduct of monetary policy. towards international standards as part of the ongoing process of reforms, it is necessary to improve our standards, codes and practices in matters relating to financial system