The central bank’s first mid-quarter policy and economic review this month is governor D Subbarao?s latest step to improve the transmission of his decisions to the public.

Beginning September 16, Reserve Bank of India will release each fiscal year four mini reviews in addition to the annual statement and three quarterly reviews that follow in late July, October and January.

The need for frequent and regular communication is a direct outcome of the shocks felt here from the recent global financial meltdown. The review will allow RBI officials to share their views more frequently in a formal setting.

The emphasis on financial inclusion could be another reason for the frequent formal communication?after all, the public must understand policy issues.

Better communication

Improving communication is one of the goals Subbarao set out soon after he took over the governorship two years ago. He is RBI?s twenty-second governor.

On the mid-quarter initiative, Subbarao said, ?We will communicate our assessment of economic conditions more frequently and will provide a rationale for either policy action or maintenance of the status quo.?

The mid-quarter review programme was announced late July in Subbarao?s first quarterly review of this fiscal year.

These mini-reviews will occur roughly six weeks after a quarterly review.

In other words, RBI?s formal policy review will take place every six-to-seven weeks through the fiscal year.

Behind closed doors

In India, policy making remains a mystery. Besides the policy statement and economy review, RBI publishes no document to explain the process of policy making, leave alone the minutes of its so-called technical committee, which is believed to advise the governor on policy.

The need for the minutes and more information on decision-making process was underlined recently when a top RBI official told reporters that the governor?s July 27 policy was not sufficiently bold to tackle inflation. Despite policy reviews?annual, quarterly, and mini mid-quarter ones ? coming out every six weeks, policy actions could take place anytime.

Subbarao said the central bank will retain the flexibility of taking swift and pre-emptive monetary policy action as and when warranted.