, the weight on the former will be increased while the weight on the latter will be reduced. these are interesting ideas, and we will explore them in greater detail. finally, let me turn to consumer literacy and protection. as we reach more and more of the population, we have to be sure that they understand the products they are being sold and have the information to make sensible decisions. caveat emptor or let the buyer beware is typically the standard used in financial markets – that is, so long as the buyer is not actively misled, she is responsible for researching her product choices and making purchase decisions. while this puts a lot of burden on the buyer to do due diligence, it also gives her a lot of freedom to make choices, including of course the freedom to make bad choices. but with poorly informed and unsophisticated investors, we should consider the dr. nachiket mor committee ’ s recommendation of setting some guidelines on what products are suitable for different categories of investors. broadly speaking, the more complicated the product the more sophisticated should be the target customer. should we move to a norm where a suite of simple products is pre - approved for dissemination to all, but as products get more complicated, financial sector providers bear more and more responsibility to show that the buyer was sophisticated and / or appropriately counseled before she purchased the product? of course, the longer run answer is for customers to become more savvy. can the technology sector help educate people in financial matters? after all, finance is not something most people learn in schools, but it is something they encounter every day in the world. low cost but high quality distance finance education is something the country very much needs and we look to entrepreneurs here to think of innovative ways to provide it. before i conclude, one caveat. technology can magnify the reach of finance for bad purposes as well as good. many of you must receive frequent emails, purportedly from me, informing you of a large sum of money that awaits you at the rbi, and urging you to send me bis central bankers ’ speeches your account details so that i can transfer the money to you. let me assure you that the rbi does not give out money, i do not send these emails, and if you do fall for such emails, you will lose a lot of money to crooks and be reminded of the adage – if anything looks too good to be true, it probably is not true.

3. 8 per cent in 2009 – 10 ( table 1 ). however, the inflation rate backed up and stayed near double digits during 2010 – 11 and 2011 – 12 before showing some moderation in 2012 – 13. given india ’ s good track record of inflation management, the persistence of elevated inflation for over two years is apparently puzzling. second, the deceleration of growth and emergence of a significant negative output gap has failed to contain inflation. it is understandable if inflation goes up in an environment of accelerating economic growth. there could be a situation when the real economy is growing above its potential growth that could trigger inflation what economists call an overheating situation. it is like an electric cable exploding if we overload it with appliances beyond its capacity. but, that is not the case. the reserve bank estimates suggest that the potential output growth of the indian economy dropped from 8. 5 per cent pre - crisis to 8. 0 per cent post - crisis and it may have further fallen to around 7. 0 per cent in the recent period. even against this scaled down estimate of potential growth, actual year - on - year gdp growth has decelerated significantly from 9. 2 per cent in the fourth quarter of 2010 – 11 to 5. 3 per cent in the second quarter of 2012 – 13. the loss of growth momentum that started in 2011 – 12 got extended into 2012 – 13. during a boom, economic activity may for a time rise above this potential level and the output gap becomes positive. during economic slowdown, the economy drops below its potential level and the output gap is negative. economic theory puts a lot of emphasis on understanding the relationship between output gap and inflation. a negative output gap bis central bankers ’ speeches implies a slack in the economy and hence a downward pressure on inflation. so, india ’ s current low growth - high inflation dynamics has been in contrast to this conventional economic theory. real gdp growth has moderated significantly below its potential. yet inflation did not cool off. third, the reserve bank raised its policy repo rate 13 times between march 2010 and october 2011 by a cumulative 375 basis points. the policy repo rate increased from a low of 4. 75 per cent to 8. 5 per cent. still it did not help contain inflation. the critics of the reserve bank argue that monetary tightening rather than lowering inflation has slowed growth. interest rate is a blunt instrument. it first slows growth and then inflation. but the growth slowdown has not