RBI's Policy Perceptions:: BS report
January 19, 2019
Interpreting RBI’s mandate
This refers to Anup Roy’s report “Das favours flexible policy objectives” (Business Standard, January 19). In his maiden speech as RBI Governor, Shaktikanta Das has asserted RBI’s mandated roles without being controversial in expression. As brought out in the report, India’s central bank has all along been playing a proactive role in promoting economic growth and financial inclusion by dovetailing its policies in consonance with GOI’s policy prescriptions. This occasionally came into conflict with the performance of RBI’s core functions in regard to maintaining price stability and regulation of institutions in the financial sector. With improved transparency in communication, sometimes media and vested interests inflated the differences in policy perceptions between GOI and RBI out of proportion.
Viewed from this angle, the clarity in policy perceptions visible in the RBI Governor’s January 19 speech is soothing and comforting. He is fully aware of the need to balance the twin objectives of economic growth and price stability and will need unreserved support from GOI by following the required discipline on the fiscal policy front. It is going to be a tight rope walk during the election year for both the Finance Minister and the RBI Governor. Unfortunately, both cannot afford to make a threat of ‘walking alone’ today, as the nation is watching curiously.
The ability of the media to play ‘blow hot, blow cold’ was well understood by former Governor Raghuram Rajan who actually brushed aside the queries about his high media image the day after he assumed office at Mint Road, saying that he knew the games media plays.
M G Warrier, Mumbai