to scarcity ), especially in the labour supplying states. total agricultural labour declined from 259 million in 2004 – 05 to 231 million in 2012 – 12. agriculture, which accounted for 60 per cent of total employment in 1999 – 2000, now accounts for less than 50 per cent ( chart 11 and table 2 ). e. female participation one of the more interesting possible explanations for the rise in rural wages is the changing female participation in rural markets. the female participation rate is down in all the age categories. improved living standards could lead rural families to withdraw women from the bis central bankers ’ speeches labour force ( chart 12 ). also, higher prosperity could lead to greater investment in educating girls ( for the age group 10 to 24 ) again leading to lower participation in the workforce. 3. to summarise in sum then, when we examine food inflation, a substantial portion stems from an increase in food production costs, primarily rural wage inflation. some of that is an increase in real wages, needed to attract labour to agriculture, away from construction, education, household work, or mgnrega. if, however, wages elsewhere also go up, the necessary shift in relative wages to keep agricultural work attractive will not take place, and we will continue to have a wage spiral. also, some of the agricultural wage growth may be because of more liquidity flowing into rural areas. somewhat paradoxically, to contain food inflation and get a strong increase in food production, we need to ( i ) contain the rise in wages elsewhere so that relative wages in agriculture can rise without too much overall increase in wages. ( ii ) contain any unwarranted rise in rural wages as well as the rise in other agricultural input costs ( though not through subsidies ) so that the farmer gets a higher return. ( iii ) allow food prices to be determined by the market and use minimum support prices to provide only a lower level of support so that production decisions do not get distorted or the price wage spiral accentuated. this means limiting the pace of msp increases going forward. ( iv ) reduce the wedge between what the farmer gets and what is paid by the household by reducing the role, number, and monopoly power of middlemen ( amend apmc acts ), as well as by improving logistics. ( v ) improve farm productivity through technology extension, irrigation, etc. note that of these steps, monetary policy has a direct role in ( i ) and ( ii ) by slowing the demand for labour and by anchoring

##modative monetary policy, the swift and effective implementation of structural reforms, in line with the 2016 countryspecific recommendations recently approved by the european council, will not only lead to higher sustainable economic growth in the euro area but will also make the euro area more bis central bankers ’ speeches resilient to global shocks. fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the european union. full and consistent implementation of the stability and growth pact over time and across countries is crucial to maintain confidence in the fiscal framework. at the same time, all countries should strive for a more growth - friendly composition of fiscal policies. we are now at your disposal for questions. bis central bankers ’ speeches