on the public awareness of economic issues and the priority that political leadership accords to public articulation of issues as compared to closed door consideration of such issues. liberalised and developed financial markets, certainly, contribute to greater public - awareness and in this regard efforts to promote financial markets also contribute to greater accountability. in the final analysis, accountability is a basic principle of democracy. at a pragmatic level there are two important arguments in favour of autonomy in addition to transparency. first, if superior technical competence is demonstrable, there is merit in according operational autonomy to the central bank. furthermore, to the extent a central bank is likely to carry greater credibility with the public opinion when it makes a commitment, there is merit in entrusting it with autonomy. in the years to come, the sheer need to improve the efficiency of operations will thrust upon the rbi a greater degree of autonomy and, therefore, a greater degree of accountability. in such a milieu it is essential that the setting of goals and the policy processes will need to evolve in a transparent manner. for the central bank, these will be difficult times but also exhilarating times. thank you!

over the years, the indian economy has gone through phases of remarkable transformation. after witnessing the hindu rate of growth for the first three decades postindependence, the indian economy got its first “ big push ” with the first phase of economic reforms in 1980s while the second major push came post 1991, following liberalisation of the economy, which helped it to move on to a sustainable higher growth trajectory. india made a radical break in 1991 from its past policies of inward orientation and started a process of opening up to trade and foreign investment. the growth response emerged a decade later as the cumulative impact of the gradual reforms began to be felt on the investment environment. india ’ s gdp growth was of the order of eight - plus per cent per annum during 2001 – 11. in the five years prior to the global financial crisis of 2008, the indian economy had averaged 9 per cent annual gdp growth. in the aftermath of the crisis, there has been a slowdown and a question on the minds of most observers is whether this slowdown is temporary or is the economy moving to a lower growth rate in the medium term. while rbi estimates that the trend / potential growth rate of the indian economy, which averaged around 8. 5 per cent during 2005 – 06 to 2007 – 08, dipped gradually thereafter and presently stands at about 7. 0 per cent, the draft twelfth five year plan ( 2012 – 2017 ) document prepared by goi indicates that india ’ s full growth potential remains around 9 per cent. 4. like the other emerging market economies, the indian economy is also facing certain challenges : inflation is high, growth is down, investment is slowing down, current account deficit is above the sustainable levels, fiscal deficit is high, and the exchange rate is bis central bankers ’ speeches under pressure. while, global slowdown is an important factor, the domestic factors are no less important. 5. at the macro level, there are concerns. but we need to separate noise from signal. the fundamentals of the economy remain strong. an important point to note is that in the more recent period, growth has become more broad - based across the many states of india, poverty has declined but financial inclusion has emerged as a major concern. there has been much more spending on inclusion and social protection. 6. going forward, there are challenges – some old, some new. the ongoing challenges are : ( i ) providing world - class infrastructure for a rapidly - growing economy, particularly in telecom and power sectors, and (