typically later and uncertain. no wonder jean - claude juncker, the former luxembourg prime minister, said at the height of the euro crisis, “ we all know what to do, we just don ’ t know how to get re - elected after we ’ ve done it! ” instead, industrial countries are engaged in ever more aggressive monetary policy moves. this imposes tremendous risks on emerging markets like ours, as we are faced with surges of capital inflows one day when investors go into “ risk - on ” mode only to see outflows the next as they switch risk off. at the same time, overcapacity in competitor countries threatens some of our key industries. what should india do? what should india do in this environment where the international investor is manic depressive in his behavior and all countries are striving for extra growth? importantly, when global growth is uncertain, we should make sure that our domestic environment promotes strong, sustainable, and stable growth. this requires a firm platform of macroeconomic stability. let me elaborate. the recent central budget emphasized fiscal prudence and adhered to past commitments, even while allocating resources towards capital spending and focusing on structural reforms, bis central bankers ’ speeches especially in agriculture. the subsequent fall in government bond yields suggests that market investors were calmed by the government ’ s overall message. fiscal consolidation, combined with lower commodity prices, has also led to a lower current account deficit. inflation is also clearly down since the days of double - digit cpi inflation not so long ago. the rbi ’ s inflation - focused monetary framework will be strengthened by the constitution of the monetary policy committee mooted in the finance bill. while the rbi governor will no longer be able to set monetary policy unilaterally, i believe shifting the decision to a committee is in the economy ’ s interest. not only will a committee aggregate multiple views better than an individual can, it will offer more continuity, and be less subject to undue pressure. i believe the monetary reforms of this government will stand out as one of its signal achievements. the last leg of the stabilization agenda is to clean up the stressed assets in the banking sector so that banks have the room to lend again. the problem in the past was that banks simply did not have enough powers to force promoters to pay, or to put stressed assets back on track. unlike more developed countries, we do not have a functioning bankruptcy system, though a bill is currently before parliament. therefore, we first

urjit r patel : agricultural debt waiver - efficacy and limitations opening remarks by dr urjit r patel, governor of the reserve bank of india, at the seminar on " agricultural debt waiver - efficacy and limitations ", mumbai, 31 august 2017. * * * ladies and gentlemen, on behalf of the reserve bank of india, i warmly welcome you and thank you for accepting our invitation to join us today in this seminar. 1. in the recent period, farm loan waivers have engaged intense attention among the farming community, policy makers, academics, analysts and researchers. on the one hand, there is a gamut of issues that have intensified the anguish of our farmers. in this context, farm loan waivers have brought forward the urgency of designing lasting solutions to the structural malaise that affects indian agriculture. on the other, there are concerns about the macroeconomic and financial implications, how long they will persist in impacting the economy, the possible distortions that they could confront public policies with, and the ultimate incidence of the financial burden. 2. let me, in a modest way, try to eclectically address both sides of the debate. india's agrarian economy is the source of around 15 percent of gdp, 11 per cent of our exports and provides livelihood to about half of india's population. the importance of the sector from a macroeconomic perspective is also reflected in a significant flow of bank credit to finance agricultural and allied activities relative to other sectors of the economy. outstanding bank advances to agriculture and allied activities have risen from about 13 per cent of gdp originating in agriculture and allied activities in 2000 - 01 to around 53 per cent in 2016 - 17 ( chart 1 ). in real terms ( adjusted for inflation measured by the gdp deflator ), the growth of bank credit to agriculture and allied activities accelerated from 2. 6 per cent in the 1990s to 15. 4 per cent during 2000 - 01 to 2016 - 17. 3. much of this credit flow has been propelled by the policy thrust on expanding credit to agriculture, especially through priority sector lending ( psl ) stipulations. public sector banks and private banks are required to lend 18 per cent of annual net bank credit ( anbc ) or credit 1 / 4 bis central bankers'speeches equivalent amounts of off - balance sheet exposures, whichever is higher, to agriculture. under this carve - out, 8 per cent is prescribed for small and marginal farmers. even foreign banks with 20 branches and above have to achieve