imperceptible and the demand for prudential regulations declines during prolonged good times, thereby increasing the ultimate cost of eventual crises. micro and macro prudential supervision the framework for regulating the financial sector has traditionally been built on a microprudential foundation, where the primary objective is to limit the risk of financial distress of individual financial institutions. this approach is consistent with the objective of protecting depositor ’ s interest and the integrity of the payments system. in contrast, the objective of macroprudential oversight is to limit systemic risk. it is not only important to consider the risk of distress of an individual bank but the aggregate risks of all interconnected entities entities in the system. hence, there is a need to evolve an appropriate mix of the micro - prudential regulations within an overarching macro - prudential framework. one of the lessons of the current crisis is that regulators need to understand the signals and identify appropriate tools to mitigate the build - up of systemic financial vulnerabilities more effectively. while financial stability reports did make such analysis particularly relating to the excess leverage and the under pricing of risk, such analysis was not translated into action in view of the seemingly benign environment and confidence in risk management system, market discipline and self regulation. a challenge for policymakers is to achieve the appropriate balance between the microprudential and macroprudential approaches to financial sector oversight. the micro prudential approach is bottom up while the macro approach is top down. in the case of the banking sector the macro prudential analysis is based on both back ward looking indicators such as balance sheet profitability asset quality and capital adequacy as well as forward looking indicators which identify major risk facing the banking sector. several mpis are constructed to summarise the available quantitative information covering competitive conditions in the banking sector, credit growth, asset market developments and the concentration of risks in the household and corporate sector. unregulated nodes in the financial architecture the global financial system over the years has evolved into a huge behemoth with strikingly monolithic characteristics and close inter - linkages. the innovations in financial products and technology have also enabled the market players to acquire a variety of risk exposures, transcending their customary role definitions. furthermore, the regulation of investment banks did not cover prudential oversight and they were allowed to build up excessive leverage. there was clear dichotomy here between the homogeneous financial profiles of various entities and the regulatory prescription

we should also continue with further reforms in labour and product markets to encourage competition and dynamism and to benefit from pandemic induced opportunities. the production linked incentive ( pli ) scheme announced by the government for certain sectors is an important initiative to boost the manufacturing sector. it is necessary that the sectors and companies which benefit from this scheme utilise this opportunity to further improve their efficiency and competitiveness. in other words, the gains from the scheme should be durable and not one off. 22. again, for growth to be sustainable, a transition towards greener future will remain critical. the need for clean and efficient energy systems, disaster resilient infrastructure, and environmental sustainability cannot be overemphasised. due consideration should be given to individual country roadmaps keeping in mind country - specific features and their stage of development while adopting policies towards climate resilience. conclusion 23. on the whole, while the pandemic has created enormous challenges, it can also act as an inflection point to alter the course of development. enhanced adoption of technology will give impetus to productivity, growth and income. leveraging technology in implementing government 4 / 5 bis central bankers'speeches schemes, training and skill development programme for the unemployed, promoting women friendly work atmosphere and supporting education of the poor and marginalized sections would be areas of focus as we embark on our journey beyond covid - 19. income and job creation with digitalisation and innovation can bring about a new age of prosperity for a large number of people. 24. many of us have grown up reading mahatma gandhi ’ s talisman5 in text books – “ i will give you a talisman. whenever you are in doubt … recall the face of the poorest and the weakest man whom you may have seen and ask yourself if the step you contemplate is going to be of any use to him. will he gain anything by it? will it restore him to a control over his own life and destiny? ” as we strive to build a stronger and resilient india, this pearl of wisdom that we learnt long ago remains as relevant even today. thank you. stay safe. namaskar! 1 pib press release “ key declaration on climate change to be signed at the india ceo forum on climate change ” dated 4th november 2020. 2 roadmap for ethanol blending in india 2020 - 25, government of india, june 2021. 3 pib press release “ eepc celebrates 50th year of engineering