##e ) has established a regional statistical data collection system covering as many as 25 indicators including business conditions, price variation, labour and employment. these are different from the qualitative surveys. information so collected is analysed and transformed into scores which forms an important input in the deliberations of the monetary policy committee ( mpc ) of the boe. india is a country with significant regional variations. hence regional inputs are valuable for policy making. with its reorganised structure and envisaged wider presence of regional offices in major centres, the department may put a similar system of gathering relevant statistics and market intelligence, particularly in the area of prices and agricultural conditions to aid policy formulation at the national level. sixth, as a part of the on - going work with dcm on forecasting of demand for currency and coins, it is necessary to conduct focused regional surveys relating to ( i ) availability / shortages of coins / currency notes, ( ii ) regional practice and usage of currency notes, and ( iii ) estimation of counterfeit currency notes in the system. in addition, the regional offices of the department could be directly involved in conducting surveys on financial inclusion, particularly assessment of financial inclusion outcomes in the villages following the outreach programme of the bank. seventh, the department has noticeable presence in a number of central office departments, like department of external investment and operations ( deio ), monetary policy department ( mpd ), internal debt management department ( idmd ), department of information technology ( dit ), department of payment and settlement systems ( dpss ), department of banking supervision ( dbs ) and financial stability unit ( fsu ). it is desirable that our officers bis central bankers ’ speeches in these departments provide analytical inputs for policy and operational issues and come out with research papers. these papers could be presented in conferences and published eventually in the rbi working paper series. this will make research more valuable in furthering our organisational objectives. eighth, focused and determined approach to research across various units, including the regional offices, should be pursued so that research agenda being adopted by the department is accomplished in a timely manner. for data management and dissemination, technology must be harnessed to its fullest extent. there is also a need to strengthen the modelling and forecasting capabilities towards developing a full fledged forecasting suite including dsge models. finally, i congratulate the department for its many achievements. however, there are challenges ahead, to some of which i have drawn your

considerable decline in output and employment. monetary policy was therefore tightened by an interest rate increase last summer. at the one - year horizon, the strong krone would push down inflation to below 2½ per cent, but the effects of strong wage growth would subsequently dominate. last year, norges bank ’ s executive board struck a balance between the consideration of stable inflation developments in the short term and the consideration of stability in output and employment. it was expected that inflation would be low in 2003. however, price developments are uncertain even 6 months to 1 year ahead. there was thus a possibility that inflation could fall even lower than projected, and be more than 1 percentage point below target. nevertheless, the deviation from the forecast is unusually large. this is an indication that the economy was exposed to sizeable unexpected disturbances. the exchange rate appreciated more than projected. after the publication of inflation report 3 / 02 in october last year, the krone appreciated further. this was related to unexpectedly weak developments in the global economy resulting in lower interest rates abroad and a wider interest rate differential between norway and other countries. negative events such as the accounting scandals in large us companies, fears of terror and war in iraq and the spread of sars contributed to weak growth and low inflation in other countries. developments in the international equity markets and the risk of higher oil prices also contributed to strengthening the krone. in addition, the norwegian business sector has clearly felt the effects of the high norwegian cost level and the strong krone in 2002. growth in private consumption came to a temporary halt last winter as a result of high electricity prices and general uncertainty. this probably affected profit margins in retail trade, particularly for durable consumer goods. public entities have also had to make adjustments following last year ’ s wage settlement. sluggish global and domestic growth has in turn had an impact on the norwegian labour market. inflation in 2003 has been pushed down by the fall in prices for imported consumer goods in particular. the low rise in imported price inflation is a consequence of the appreciation of the krone throughout 2002 and low inflation abroad. the rise in prices for domestically produced goods and services has also gradually slowed. this is particularly the case for prices for domestically produced goods influenced by world market prices. the fall in prices for imported consumer goods is not solely attributable to exchange rate developments. clothing prices have exhibited a falling trend over the past few years. in october 2003, clothing prices were 13. 7 per cent lower than in the same month