that announcement. in and of itself, this clearly heightens inflation risks. these risks are perhaps aggravated by the fact that, amidst all the global turbulence, crude oil prices have remained quite firm. while the relative stability of oil prices in dollar terms would have provided a strong favourable base effect for domestic inflation beginning in december, this will be offset somewhat by the depreciation of the rupee. however, our projections suggest that the impact will not change the anticipated downward trajectory of inflation. if a sustainable solution to the european sovereign debt problem emerges over the next few weeks, global portfolio rebalancing could reverse the movement in the rupee, which in turn will help moderate the inflation risk. importantly, apart from oil, prices of some other commodities have shown some signs of softening, which is obviously positive for the inflation outlook. bis central bankers ’ speeches on the growth front, the recently published estimates for q2 of 2011 – 12 substantiate the general expectation of a moderation in growth during the current year. some of this is attributable to the cumulative impact of interest rate hikes. in this sense, it is an expected outcome of monetary policy actions, which, as is well - known, work to curb inflation by moderating demand. typically, a growth deceleration precedes an inflation deceleration, so the pattern playing out now is consistent with the expectation that inflation will begin to moderate over the next few months. this has been the basis of our projections and guidance on future policy actions. of course, there have been other factors that have impacted aggregate demand, especially the investment component. however, just as with the exchange rate and inflation, there are growth risks as well. persistent global turbulence is always going to adversely impact the investment climate, which may be further aggravated by domestic conditions. apart from interest rates, investment activity, which is critical to sustaining high growth with low inflation, is also sensitive to a number of other factors. policy actions, both on the fiscal and regulatory fronts, that can favourably impact the investment climate will be critical to mitigating the risks to growth. these run the gamut from tax reform to land acquisition to skill development. a number of initiatives on each of these fronts are visible, but quick resolution and implementation is the key. an important risk factor that we have been consistently highlighting is food. although data from the most recent weeks points to a steady decline in food inflation, the likelihood is that food prices

deepak mohanty : economic and financial developments in uttarakhand speech by mr deepak mohanty, executive director of the reserve bank of india, at the g. b. pant university of agricultural technology, pantnagar, 31 august 2012. * * * the assistance provided by p k nayak and s suraj in preparation of the speech is acknowledged. i thank professor murthy for inviting me to share my thoughts with a young audience in an institution which has a formidable reputation in agricultural research as having pioneered the “ green revolution ”. in my talk today, i propose to briefly outline the economic and financial structure of the state as well as highlight various financial inclusion initiatives taken by the reserve bank. i will then indicate a few policy challenges in sustaining the growth momentum. i conclude with some thoughts on the agricultural economy. i will trace the economic development starting from the early 2000s mainly because uttarakhand was instituted in 2000 as the 27th state of the republic of india. the state known as the abode of gods is truly a paradise for nature lovers and adventure sports endowed with the natural bounty of glaciers, rivers and forests. it is one of the thinly populated states accounting for 1. 6 per cent of the total geographical area of the country and 0. 8 per cent of the national population. located in the foothills of the himalayas, uttarakhand ’ s terrain and agro - climatic conditions obviously provide unique challenges as well as opportunities for growth and development. macroeconomic trends in the 2000s, the indian economy witnessed acceleration in economic growth. it is noteworthy that the state registered even higher growth thus emerging as one of the fastest growing states in india ( chart 1 ). the growth acceleration in the state was also reflected in the per capita income which increased by 168 per cent from ₹19, 457 in 2001 – 02 to ₹52, 125 by 2011 – 12. the increase in the state per capita income was much sharper as compared to the all - india per capita income which increased by 81 per cent from ₹20, 943 to ₹37, 851 during the same period ( chart 2 ). this enabled the state to significantly improve its rank among the 28 states from 17th to 10th during the same period. the growth impulses in the initial phase during 2001 – 08 emanated mainly from industry and services. in the latter phase of 2009 – 12, growth was driven by the services sector. however, in both the phases agricultural growth remained low and volatile (