cent of investment in the country during this period was financed by the domestic savings. on the price stability front, india's performance has been fairly good. since independence, the inflation rate, in terms of the wholesale price index ( wpi ), on an average basis, was above 15 per cent in only five out of fifty years. in thirty - six out of fifty years, inflation was in single digit and on most occasions high inflation was due to shocks – food or oil. the tolerance level to inflation has been low, relative to many developing countries, especially on account of the democratic pressures in the country. the inflation rate accelerated steadily from an annual average of 1. 7 per cent during the 1950s to 6. 4 percent during the 1960s and further to 9. 0 per cent in the 1970s before easing marginally to 8. 0 per cent in the 1980s. however, the inflation rate declined from an average of 11. 0 per cent during 199095 to 5. 3 per cent during the second half of the 1990s ( 1995 - 2000 ) and further to 4. 9 per cent during 2003 - 07. more recently during 2006 - 07, wpi based inflation rate increased from 4. 1 per cent at the end of march 2006 to an intra - year peak of 6. 7 per cent at end - january 2007 and remained firm in the range of 6. 1 - 6. 6 per cent in the succeeding weeks before moderating to 5. 9 per cent by the end of the financial year ( i. e., as on march 31, 2007 ). since then, the inflation has further moderated and as on june 16, 2007, the wpi inflation rate was 4. 0 per cent. in recent period, there has been considerable improvement in the fiscal position. the average gross fiscal deficit of the central government as per cent to gdp during the decade of 1980s was 6. 8 per cent as against 3. 8 per cent in the 1970s. the government of india is pursuing the path of rule - based fiscal consolidation from the year 2004 - 05 under the fiscal responsibility and budget management act, 2003 whereunder time - specific targets have been mandated. the underlying purpose of the targets is to reduce the ratio of gross fiscal deficit ( gfd ) to gross domestic product ( gdp ) to three per cent by 2008 - 09. furthermore, the revenue deficit ( rd ) to gdp ratio has been targeted to touch 0. 0 per cent by 2008 - 09 so that borrowed resources

end - march 2006. the net non - performing assets declined to 1. 2 per cent of net advances during 2005 - 06 from 2. 0 per cent in 2004 - 05. according to the preliminary financial results available for most of the banks for the year 2006 - 07, the financial soundness has improved further. our banking sector reform has been unique in the world in that it combines a comprehensive reorientation of competition, regulation and ownership in a non - disruptive and cost - effective manner. indeed our banking reform is a good illustration of the dynamism of the public sector in managing the overhang problems and the pragmatism of public policy in enabling the domestic and foreign private sectors to compete and expand. there has been no banking crisis in india. the government took steps to reduce its ownership in nationalised banks and inducted private ownership but without altering their public sector character. the underlying rationale of this approach is to assure that the salutary features of public sector banking were not lost in the transformation process. on account of healthy market value of the banks ’ shares, the capital infusion into the banks by the government has turned out to be profitable for the government. an independent banking codes and standards board of india was set up on the model of the uk in order to ensure that comprehensive code of conduct for fair treatment of customers is evolved and adhered to. with a view to achieving greater financial inclusion, since november 2005, all banks need to make available a basic banking ‘ no frills ’ account either with ‘ nil ’ or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population. banks were urged to review their existing practices to align them with the objective of ‘ financial inclusion ’. there is a scheme of ombudsman, located in fifteen cities to provide redressal to grievances of the bank customers. customer - service is accorded high priority in the supervisory evaluation and according regulatory comfort to the reserve bank. with a view to strengthening the supervisory framework within the reserve bank, a board for financial supervision ( bfs ) was constituted in 1994, comprising select members of the reserve bank ’ s central board with a variety of professional expertise to exercise'undivided attention to supervision'and ensure an integrated approach to supervision of commercial banks and financial institutions. the reserve bank has also instituted off - site monitoring and surveillance system ( osmos ) for banks in 1995, which provides for early warning system as