hostilities have tested the resilience of every economy in the world, including india. the well - calibrated and co - ordinated monetary and fiscal policies adopted in our country went a long way in shielding our economy from these shocks and helped us emerge even stronger than before. it is a matter of satisfaction that today our gdp growth is robust ; inflation is moderating ; the financial sector is stable ; the external sector remains resilient ; and the forex reserves are at an all - time high. over the years, the reserve bank has emerged as a symbol of stability, resilience, and commitment to the welfare of our citizens. this has been possible due to the 1 / 2 bis - central bankers'speeches contributions made by generations of team rbi. as we move towards rbi @ 100, the reserve bank remains focused on ensuring a stable and strong financial system that would act as a bedrock for our country's economic progress. with these words, let me once again welcome the hon'ble prime minister and the other dignitaries to this commemorative event. i also extend a warm welcome to each one of you in the audience. thank you. namaskar! 2 / 2 bis - central bankers'speeches

initiatives envisaged under the fiscal responsibility and budget management ( frbm ) act, public savings are expected to improve further. besides, households in india are the major contributors to savings and given the favourable indian demographics over the next 20 years, the savings rate in india is expected to remain high. this is in sharp contrast to other east asian countries as well as in the us, where major contributor to savings are the corporates that largely depend on the cyclical path of the economy. iv. possible impact of global imbalances on india fiscal india continues to have a high fiscal deficit by international standards though it has declined significantly in recent years. in order to achieve sustainable fiscal correction and consolidation, both the central and state governments have adopted fiscal responsibility legislations i. e., fiscal responsibility and budget management ( frbm ) acts. the combined fiscal deficit of the centre and states is budgeted to come down to about 6. 5 per cent by 2007 ( table 4 ). even if it is assumed that the centre and the states comply with their respective frbms, their combined fiscal deficit would continue to remain above 6 per cent by 2009 - 10. generally, one would presume that india remains somewhat vulnerable to the impact of global imbalances on this account. however, the indian case is unique as the government does not resort to external financing to finance domestic debt. this would help india in not being subject to the consequences of global imbalances. in addition, both reserve bank of india and government of india have undertaken various initiatives to develop the government securities market. the earlier features of an administered market with automatic monetisation have been done away with. the indian g - sec market today is more broad based, characterised by an efficient auction process, an active secondary market supported by an active primary dealer system and electronic trading and settlement technology ( mohan, 2006 ). the effect of global imbalances, however, could be indirect through a rise in domestic interest rates as a consequence of rise in international rates. there could be an increase in the cost of borrowings of the government. however, since most of the outstanding debt is at fixed rates and not on floating rates, the rise in the borrowing cost will be incremental. this situation also provides greater headroom for a flexible monetary policy to adjust policy rates, as and when warranted, without any excessive impact on the fiscal deficit ( reddy, 2005 ). private corporate sector private corporate external borrowing has been liberalised substantially in