Reserve Bank of India Governor D Subbarao today said the central bank needed to learn to manage economic and regulatory policies in a globalised environment.
While listing the challenges faced by RBI, the governor said with the Indian economy integrating with the rest of the world, external developments would increasingly affect the domestic macro-economic environment.
RBI came in for praise for the way it had handled the aftermath of the financial crisis, as also the gradual opening up, which was widely perceived to have helped India weather the storm.
Addressing the concluding ceremony of RBI’s platinum jubilee celebrations, Subbarao said the regulator needed to reposition itself as a knowledge institution. “Think global and act local,” he said.
In addition, he said the central bank needed to become a more transparent and sensitive institution. “We also need to communicate effectively and credibly, and explain the logic of our decisions and actions at both technical and non-technical levels. Being able to communicate clearly is non-trivial in many ways. ‘Centralbankspeak’, the language that central bankers speak, can get counterproductive, if not used wisely,” he said.
While pointing to the outreach programme started by RBI, the governor said the biggest challenge was to ensure that growth in the financial sector did not lose touch with real growth.
Subbarao, who had repeated stressed on financial inclusion, said despite the RBI’s efforts, widening financial inclusion in the country remained a challenge.