small enterprises in order to maintain their competitiveness. thus, with the de - reservation of the ssi sector in india, a larger number of industrial units would be in a position to exploit the opportunities provided by globalisation, given the vast potential of exports from this sector. ministry of ssi under govt. of india has been laying more emphasis on cluster - based approach for development of ssi sector. so far ministry has identified 60 clusters for focused development of ssi and banks in these areas are initiating necessary steps to meet their credit requirements effectively. future action as the evidence shows, several initiatives are being taken at the national and international levels to foster the development of smes and improve their access to finance. notwithstanding these initiatives, impediments to sme finance remain, in different degrees, in both developed and developing economies, which constitute the single most important factor that could circumscribe their growth trajectory. accordingly, the attention of policy makers may need to focus on the following three broad issues, viz., creating a conducive business environment, development of clusters, and enhancing credit flows to smes as these are widely debated in the contemporary discussions. governments need to take initiatives to ensure that the overall policy environment encourages industrial activity in general, and sme activity, in particular, given the latter ’ s significant contribution to general economic activity in many countries. this would entail efforts to maintain macroeconomic stability in terms of low fiscal deficits and debts ( such that private savings are not pre - empted ), low and stable inflation, low real rates of interest and a sustainable current account. this apart, initiatives would need to be taken, wherever necessary, to remove outdated and anomalous restrictions on domestic production, bring about a reduction in tariff and tax rates to internationally competitive levels, create a competitive environment through appropriate legislation, if necessary provide public infrastructure support, reduce inflexibilities in the labour market with due cognizance to the need for appropriate social safety nets and invoke necessary reforms in bankruptcy and exit procedures. streamlining of procedures to disburse loans to smes, creating a regulatory / legal framework that ensures timely payment of dues to smes, providing technical training to staff of financial institutions and organising general awareness programmes on sme financing would also be necessary. these measures would not only encourage sme activity but also have a salutary impact on their efficiency and hence, on their overall requirements of finance. newer forms of

government embarked on a wide ranging programme of economic reforms that defined a paradigm shift in the economic management of the country. the reserve bank was a partner in this exciting process, generating ideas, processing proposals and implementing reform initiatives. chapters 10 to 12 of this volume provide a vivid account of this momentous phase in our economic history. does history repeat itself? 9. does history repeat itself? this is a cliched question but nevertheless an instructive one. in their painstakingly researched book, this time is different : eight centuries of financial folly, kenneth rogoff and carmen reinhart argue that every time a crisis has occurred, experts have been asked why they did not see it coming. every time, experts have replied that past experience was no guide because the latest crisis is a result of new circumstances. in other words, their standard excuse has been, “ this time is different ”. yet this “ this time is different ” argument does not hold. reinhart and rogoff put forward impressive evidence showing that over eight hundred years, all financial crises can be traced to the same fundamental causes as if we learnt nothing from one crisis to another. 10. the surmise therefore is that, at least in matters of economics and finance, history repeats itself, not because it is an inherent trait of history, but because we don ’ t learn from history and let the repeat occur. i believe this surmise holds notwithstanding the spreadsheet error in the reinhart - rogoff research. 11. has rbi history repeated itself? that is a judgement call. but some issues do keep repeating in rbi history. i will give just one illustration rbi and gold 12. take the issue of gold. rbi history documents that about 35 years ago, the reserve bank got into a controversy over its auction of gold. again, in 1991, there was a heated, if also emotional, debate in the country when the reserve bank pledged its gold reserves to tide over the balance of payments stress. it will be interesting to conjecture on how history will judge the purchase of 200 mt of gold by the reserve bank from the imf in 2010, and its more recent policies to restrain imports of gold? bis central bankers ’ speeches looking ahead 13. when former chinese premiere zhou en lai was asked what he thought of the french revolution, he said it was too early to take a view. defying chinese wisdom of experience is not for the faint hearted. nevertheless, i am tempted to look ahead to how history