May 7, 2014
RBI Watch Organization Development
Data and its interpretation play a key role in formulating
policy at the Reserve Bank of India. In recent years, RBI has had apparently a difficult time
forecasting GDP and inflation trends: generally, inflation has been higher and
GDP has been lower than expected.
The RBI is primarily organised with centralised economics
and statistics departments in Mumbai at its head office (it also has a regional
office). To get better insight into what is happening in the economy at the
national level, RBI needs more insight into the trends in the economy at a
regional/state level.
To begin with, the RBI could start gathering data and
conducting research on the major economic clusters in India. One way to look at
this is in terms of the States that contribute to the predominant share of
India’s GDP. This fits well with the way the RBI is organized: it has regional
offices in the States.
To start with, I would suggest that the RBI should gather regional
data from those states that are major contributors to India’s economy, e.g. Maharashtra,
Uttarakhand, Tamil Nadu, Andhra Pradesh, Gujarat, West Bengal, Karnataka and
Delhi. For this the RBI needs to develop full-fledged economics and statistics departments at its Regional Offices in these States, example, Mumbai, Dehradun,
Chennai, Hyderabad, Ahmedabad, Kolkata, Bengaluru and Delhi.
Staff at these Offices should conduct research primarily on
their region, and the linkages between the region and the national economy. Staff
should be encouraged to write Working Papers as does the Staff at the Central
Office.
Or RBI could pick the top three or four states that
contribute to each of the three major sectors: services, industry and
agriculture. Then pick the offices where regional economics and statistics
departments need to be developed.
I would urge the RBI to explore the suggestion made in this
note.
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