capital run its course, and the supply and demand for capital goods return to balance? this question is not answerable with certainty. there are reasons to be hopeful and reasons to be cautious. just as firms might tend to overestimate their longer - term capital requirements when times are good, there likely is some tendency to underestimate longer - term needs when the economy is soft. thus, it could well be that stocks of capital will not seem so excessive once the economy picks up. moreover, as a number of observers have suggested, the fact that a capital stock overhang might be concentrated most heavily in the high - tech industries has one important silver lining. this advantage is that, on average, a good deal of high - tech equipment probably depreciates more rapidly than most other types of equipment. consequently, with other things equal, the shorter life of some of the capital currently held in excess amounts would seem to imply that the overhang can be worked off more quickly than otherwise. there is much to be said for this point of view, and undoubtedly the adjustment process may progress more quickly than if the overhang were concentrated in other types of equipment or structures. nonetheless, in the interest of exploring more fully the potential dynamics of high - tech capital investment, i would like to take a few minutes to examine why an overhang might take longer to work off than we might like or expect. and i have to emphasize here that i am focusing on some parts of the high - tech sector, not the sector as a whole, and certainly not the economy as a whole. one reason an overhang could persist is that some types of high - tech capital do not depreciate rapidly. for instance, unlike the equipment that sends signals down the optical fiber, the fiber itself probably has a useful lifetime that is reasonably long. optical fiber today is not greatly different in quality from the fiber of a few years ago, and there is little physical deterioration once the fiber is in the ground. all this suggests that the excess capacity of total fiber could take quite some time to work off. and presumably other types of equipment and structures are similar in this respect to fiber. second, depreciation rates are partly a reflection of economic obsolescence ; that is, capital often loses value because of the expectation that it will soon be replaced by newer, more advanced equipment. however, the replacement decision is, to some degree, at the discretion of the firm that owns the capital. in the

to be good plumbers and electricians rather than unemployable low - skilled engineers. in fact, teaching our citizens can be a stepping stone to teaching the world. india can be at the forefront of providing mass technology - enabled education with our professors providing appropriate human inputs to achieve the best mix of automation and customisation for learning. 3 ) we need better business regulation. this does not always mean less regulation but it means regulation that is appropriate to the objective and, that is enforced. entrepreneurs tell me about boiler inspectors showing up at software outfits, asking for the location of the boiler. the lack of change may be sheer inertia, but it may be more sinister rent - seeking. all too often, we have too much regulation on the books and too little regulation in practice, with the worst of the regulated finding unscrupulous ways around the regulation while the honest are stymied. even opening a business legitimately requires an enormous number of clearances and paperwork. in the same way as we have saral form for filing income tax, could we have a saral one page disclosure for opening a small business, with a single authority giving all necessary permissions? bis central bankers ’ speeches 4 ) and finally, we need a better financial system, which will finance the needed infrastructure and the expansion of every producer ranging from the kirana shop owner to the industrialist. but finance is not only about credit. equally important is for households to be able to save safely with positive real returns, insure themselves against health emergencies or old age costs, and borrow at low cost to finance consumption. they should be able to make remittances cheaply and pay at low cost. importantly, the financial system should not require constant subsidies to bail it out. in the rest of this talk, i want to focus on what we, at the reserve bank, are doing to improve the financial system. we plan to build the reserve bank ’ s developmental measures over the next few quarters on five pillars. these are : 1. clarifying and strengthening the monetary policy framework. 2. strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better regulated organizational forms. 3. broadening and deepening financial markets and increasing their liquidity and resilience so that they can help allocate and absorb the risks entailed in financing india ’ s growth. 4. expanding access to finance for small and medium enterprises, the uno