Provisions of the RBI Act, 1934, and its regulations do not provide for making the report public, said minister of state for finance.
RBI report on reasons for failure in meeting inflation target will not be made public. Representational Image (Creative Commons)
The Central government on Monday, 12 December, ruled out making public the RBI report detailing the reasons why the central bank could not keep inflation within the targeted 6 percent upper limit for three consecutive quarters.
“Yes sir, RBI has furnished a report to the central government, as mandated under Section 45ZN of the RBI Act, 1934 and Regulation 7 of RBI Monetary Policy Committee and Monetary Policy Process Regulations, 2016,” minister of state for finance Pankaj Chaudhary said in a written reply.
The said provisions of the RBI Act, 1934, and regulations therein do not provide for making the report public, he said.
The average inflation was above the upper tolerance level of the inflation target, which is 6 percent for 3 consecutive quarters during January-September, 2022.
During the January-March quarter, the average inflation was 6.3 per cent, in the April-June period it was 7.3 percent and it eased to 7 percent in the September quarter.
It was the first time since the monetary policy framework came into effect in 2016 that RBI had to give an explanation to the government.
The retail inflation based on Consumer Price Index (CPI) has remained above 6 percent since January 2022. It was 7.41 percent in September. The six-member MPC headed by Governor Shaktikanta Das factors in retail inflation while deciding the bi-monthly monetary policy.
Since May, the RBI has raised the short-term lending rate (repo) by 2.25 basis points, taking it to a nearly three-year high of 6.25 percent.
In August 2016, the Central government notified 4 percent CPI inflation as the target for the period from 5 August, 2016, to 31 March, 2021, with an upper tolerance limit of 6 percent and the lower tolerance limit of 2 percent.
On 31 March, 2021, the central government retained the inflation target and the tolerance band for the next five-year period from 1 April, 2021, to 31 March, 2026.
Replying to another question, Chaudhary said, soaring commodity prices at the international level and pandemic-induced supply-demand imbalances have caused a rise in the inflation rate worldwide, including in India.
The Russia-Ukraine conflict has exacerbated the inflationary pressures in crude oil, gas, metals and edible oils (sunflower), he said.
Further, he said, the onset of heat waves and uneven rainfall in the later part of the monsoon season has led to crop damage and a rise in vegetable prices. Recently, the inflation rate has come down to 6.77 percent in October 2022.
The price situation of major essential commodities is monitored by the government on a regular basis and corrective action is taken from time to time, he said, adding, several supply-side measures have been taken by the government to address inflation and to ensure that the poor do not have to bear the extra financial burden.
These included a reduction in excise duty by ₹8 per litre on petrol and ₹6 per litre on diesel on 21 May, 2022, prohibition of the export of wheat products, imposition of export duty on rice, reduction in import duties and cess on pulses.
In reply to another question, he said, the foreign exchange reserves of India stood at $607.31 billion as on 31 March, 2022, and it declined by $74.65 billion to $532.66 billion as on 30 September, 2022.
“The changes in the foreign exchange reserves are mainly due to the revaluation of foreign currency assets to reflect prevailing global market conditions and on account of market intervention operations of the Reserve Bank of India to smoothen exchange rate volatility,” he said.
On Sukanya Samriddhi Yojana, Chaudhary said, the number of persons benefitted throughout the country with the launch of the scheme so far till 31 October is 31,82,568.
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