RBI's many roles hinder core monetary policy mandate, resolution is crucial

Columnists like me are offering advice to the new governor of the Reserve Bank of India (RBI) on the important questions that he faces. However, a remarkable feature of the present situation is that, for the governor to succeed, the onus is on the Government of India (GoI).

 

Most central banks (CB) are narrowly focused on monetary policy. The RBI has a sprawling mandate. The trouble is these roles contain many inherent conflicts. The bulk of the RBI’s difficulties arise from these conflicts. What are these roles?

 

1. RBI is the monetary authority, with its functions now controlled by the