“It is a report sent under a law. I do not have the privilege, authority or luxury to publish a letter like this which is written under the law as per the legal requirement,” the RBI Governor said.

Das said India’s economy is seen as a story of resilience and optimism by the world and inflation is now expected to moderate. File photo

Ahead of its additional Monetary Policy Committee (MPC) meeting on Thursday (November 3rd), the Reserve Bank of India (RBI) said it would not immediately report to the government on its failure to maintain the retail inflation rate in below 6%, Public.

For the first time since the implementation of the monetary policy framework in 2016, the RBI will submit a report to the government on its failure to keep the retail inflation rate below 6% for three consecutive quarters from January 2022 .

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“It is a report sent under a law. I do not have the privilege, authority or luxury to publish a letter like this which is written under the law, in accordance with the legal requirement. I don’t have the privilege, authority, or luxury to release it to the media before the recipient (the government) even receives it. There is so much communication between the Reserve Bank and the government, back and forth. We do not share every letter,” RBI Governor Shaktikanta Das said on Wednesday, November 2.

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He added that the report will be available in the public domain at some point. “But that does not mean that the contents of this letter and the report are always secret. They will be available in the public domain at some point.

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The monetary policy framework, which came into effect about six years ago, requires the RBI to keep retail price inflation at 4% with a margin of 2% on either side.

In case of non-compliance with the inflation target for three consecutive quarters, the central bank under Section 45ZN of the RBI Act is required to submit a report to the government explaining the reasons and specifying the corrective measures it would take to verify the price increase.

The central bank called a special meeting of the MPC to prepare its report on inflation targets missing from the government. The six-member rate-setting committee is headed by Das.

Amid criticism the RBI has faced for missing the inflation target, Das defended his policy saying the economy would have taken a ‘complete downward turn’ had it started to tighten rates more early.

Das said India’s economy is seen as a story of resilience and optimism by the world and inflation is now expected to moderate.

Acknowledging that the central bank missed its primary objective as inflation consistently overshot, Das said there was also a need to appreciate the counterfactual aspect and consider the impact of premature tightening that would have harmed recovery.

“That (tightening earlier) would have been very costly for the economy. It would have been very expensive for the citizens of this country. We would have paid a high price,” he said.

“We have prevented a complete turnaround in our economy,” Das said, adding that RBI does not want to disrupt the recovery process and is guiding the economy to a safe landing.

(With contributions from the agency)

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