swaminathan j : catalysing inclusive growth - strengthening partnerships for reaching the last mile keynote address by mr swaminathan j, deputy governor of the reserve bank of india, at the conference for lead district managers of maharashtra held in tadoba, chandrapur, maharashtra, 30 november 2024. * * * regional director for mumbai regional office, shri suman ray ; regional director for nagpur regional office, shri sachin shende ; chief general manager, national bank for agriculture and rural development, ms. rashmi darad ; general manager, bank of maharashtra and convenor, slbc maharashtra, shri r d deshmukh ; senior executives from banks, lead district managers ( ldms ), lead district officers ( ldos ) and my colleagues from reserve bank of india, present here. good morning, it is my proud privilege today to be addressing this conference for lead district managers of maharashtra. being here near nagpur and that, too, for a conference of the ldms, it would be amiss of me if i am not reminded of shri baba amte, whose ashram is within a few kilometres. as you all would be aware he was one of the proponents of rural economy - driven growth. there is this one part of a quote attributed to him, which says, " a balanced economic system is one which provides sufficiency for all and superfluity for some - " when you parse the quote, you will realise that the ldms are facilitating the sufficiency of the rural economy. and balancing the economy by facilitating sufficiency for the rural economy rings as much true today as it must have been when it was said. when you look at the results of the economic survey, 2023 - 24, it is observed that indian agriculture sector provides livelihood support to about 42. 3 per cent of the population and has a share of 18. 2 per cent in the country's gdp at current prices. 1 so, with the rural economy thriving, the role of lead banks assumes a renewed emphasis. in fact, the aspirational goals that rbi has set for rbi @ 1002 in a multi - year time frame, reiterates its focus on'accessibility, availability and quality of financial services to all sections of the society '. it is this underlying principle that had conceptualised the lead bank scheme ( lbs ) in 1969. the lead bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the

low - wage countries. but a flatter phillips curve does not call into question this relationship : we are in no doubt about the way we are heading : the recovery and job creations will lead to higher wages and, ultimately, more inflation. but we nevertheless remain less certain as to the speed of this adjustment. we are both confident about the effectiveness of our monetary policy and willing to be patient regarding the time it will take. ii. what prospects for the future? let me now turn to the consequences for our monetary policy. you are well aware that we at the ecb ’ s governing council will decide this autumn on the re - calibration of our policy instruments beyond the end of the year – and, i quote mario draghi, “ probably the bulk of these decisions will be taken in october ”. we are now faced with a simple requirement, in line with our mandate to maintain price stability, and the progress towards our inflation target : we have to reduce the intensity of our net asset purchases, while maintaining overall a substantially accommodative monetary policy. as regards our asset purchases, we have to reduce their intensity in a pragmatic manner, as we already decided successfully in december 2016. i insist on the word “ pragmatic ” because, while keeping the current rules, we should on the one hand exploit the margins of flexibility of the programme and on the other hand hold in reserve an additional purchasing capacity – if needed. that said, monetary policy is not limited to qe, and qe is not limited to net asset purchases : we can keep a substantial degree of monetary accommodation even if we reduce our monthly flow of net purchases. 1 / on qe, the academic literature provides consistent evidence that the impact of asset purchase programmes on the yield curve and asset prices is primarily driven by the total stock of assets held by the central bank ( the so called “ stock effect ” ), rather than by the flow of transactions conducted over a given period ( “ flow effect ” ). in - house studies of the effects of the pspp find that holding a stock of bonds equivalent to 10 % of gdp lowers the 10 - year yield by about 45 bps in the euro - area. 5 by contrast, flows of purchases have no significant additional impact. these results imply that our current programme lowers the 10 - year euro - area government bond yield by about 100 bps. these effects are of similar magnitude than results obtained for the programmes conducted in the united states and the