Poonam Gupta says that the central bank uses a varied set of approaches to generate its growth projections
Highlighting that it is equally important is to ensure that there is no systematic bias in the forecasts, Poonam Gupta, Deputy Governor, Reserve Bank of India (RBI), stated that as far as the inflation forecasts used in the monetary policy committee (MPC) resolution are concerned, they are unbiased.
“The recently released discussion paper on review of the monetary policy framework shows that, the deviation of inflation and growth forecasts of the MPC in India during the inflation-targeting regime does not have any systematic directional bias from the realised inflation and growth,” Gupta highlighted.
The deputy governor noted that central bank uses a varied set of approaches to generate its growth projections. RBI relies on a balanced synthesis of robust econometric analysis, contemporary economic conditions, and forward-looking sectoral perspectives in preparing its projections, she said.
While delivering a speech at pre-release consultative workshop on base revision of Consumer Price Index (CPI), Gross Domestic Product (GDP) and Index of Industrial Production (IIP), she added that before each monetary policy meeting, we hold nearly a dozen discussions with stakeholders from the real sector, financial markets, banks, NBFCs, analysts, and economists.
“Regularly updating and revising the existing data series, as well as constructing new ones, is essential to capture ongoing transformations. We all are looking forward to the revised series being prepared by Ministry of Statistics and Programme Implementation (MoSPI). I once again congratulate MoSPI for launching this consultative process and wish the workshop every success,” she explained.
Gupta noted that the central bank has started to compile data on the total flow of financial resources to the commercial sector. The non-bank sources include issuances of equity, commercial paper, and corporate bonds by non-financial entities directly in the money and capital markets as well as credit to these entities from non-banking financial institutions.
