Contents of MPC letter to govt will be out in due course: Shaktikanta Das | The Financial Express

Contents of MPC letter to govt will be out in due course: Shaktikanta Das

Strap: CBDC retail rollout later this month, says RBI governor,

Contents of MPC letter to govt will be out in due course: Shaktikanta Das
Shaktikanta Das (IE)

Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday sought to allay concerns that the Monetary Policy Committee’s explanation to the government on breaching of the inflation target would not be made public. Das asserted the RBI was not authorised to reveal the contents because this was privileged information, but transparency would not be compromised as the contents of the letter would be made known at some point.

“The first right of receiving the letter lies with the government. The addressee should get it first. In due course, sooner than later, it will be out. So, it is not as if the transparency is being compromised in any manner,” the governor observed.

Speaking at the FIBAC 2002 Conference, Das said the communication would focus on what led to consumer price inflation staying above 6% for three consecutive quarters and the steps that would be initiated to rein in inflation within 2-6 %.

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Accepting that inflation had crossed the target band, Das said a premature rate hike would have hurt the economy, taking a toll on households. The central bank was trying to prevent a “complete collapse of the economy” by keeping rates lower and stayed away from premature tightening, Das said.

With inflation having stayed above 6% for three consecutive quarters, the central bank is required to explain the breach to the government and also indicate a timeline for when the price rise would be controlled.

Das also called for a dispassionate response to the depreciating rupee, pointing out the currency had behaved in an orderly way.

Meanwhile, the RBI will launch the central bank digital currency (CBDC) in its entirety in the near future, after all technical and process-related glitches are taken care of. “We want to iron out all those aspects and introduce it in a manner that the whole process of introduction thereafter is non-disruptive,” Das said. The retail phase of the CBDC pilot would be launched later this month, the governor said.

On Tuesday, the RBI launched the CBDC pilot for the wholesale segment, with nine banks participating in the exercise that saw them trade in gilts in the secondary market. “It was a landmark moment in the history of money, in the history of currency in our country, going forward … the RBI is among the very few central banks in the world which have taken this initiative,” Das said. While the total value of trades on Tuesday was `275 crore across 48 trades, on Wednesday the value increased to `290 crore across 45 trades.

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The apex bank is also planning to extend the end-to-end digitised Kisan Credit Card (KCC) loans to SME businesses and to launch digitised KCC loans to farmers in 2023. Currently, the project is being implemented on a pilot basis in two states.

The FIBAC 2022 conference is being organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) and Indian Banks’ Association (IBA).

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First published on: 03-11-2022 at 05:30 IST