In a dynamic environment, which we all live in, everything is susceptible to a change. But when the change comes from within taking prudent cognisance of the environment around, it most often does serve well.

"Change is the end result of all true learning" – Dr.Felice Leonardo Buscaglia. Sowell-said by the ex-professor at the University of Southern California, who was also a New York Times bestseller.

Even our own father of the nation, Mahatma Gandhi has so beautifully said, “Be the change that you wish to see in the world.”

And this time taking lessons from these eminent personalities, the Reserve Bank of India (RBI) is in for change. The central bank is planning to re-define its roles and functions amid a dynamic macroeconomic scenario. You see, it is contemplating changing its core purpose for the first time in over 79 years of its existence.

The role RBI would play…
From the role of “monetary stability”in its current preamble, the central bank intends to foster “monetary and financial stability conducive to sustainable economic growth and to ensure the development of an efficient and inclusive financial system.” This is because; over years the role of the central bank has evolved gradually without any major or radical restructuring to the system. Today it is not merely the monetary authority.

Therefore recognising this, core purpose, values and vision statement has been redrafted by the senior management committee and the same will be sent to the central bank’s board for an approval. The purpose of the new vision, according to the RBI, is to delineate its strategic objectives and provide the framework and backdrop within and against which its policies will be formulated and the direction the bank would take.

The draft emphasises on issues which are more relevant in the current scenario. These include:
 

• Autonomy in functioning;
• Fostering confidence in the internal and external value of rupee;
• Curbing inflation; and
• Achieving inclusive growth

The RBI appears to besignificantly widening its scope of its role along with it signalling importance of itretaining freedom and autonomy while formulating policies. The efforts have also been made to provide the framework within which policies of the bank would be devised.

PersonalFN is of the view that with the ambit of the preamble getting widened, the RBI can play a significant role in the development of the country. Pro-active stance of RBI has come at the right time as there is a long held discussion about the role of the central bank. But it is vitalthat freedom and autonomy of RBI is preserved, for whenever tough stance needs to be taken. Having said this, the dialogue between the central bank and the Government is crucial. It is noteworthy that the prudence adopted by RBI in its monetary policy has been well-appreciated by eminent economist abroad, when sub-prime mortgage crisis rattle international banks and some having bitten dust.

Now, if RBI manages to play an effective role in stabilising the Indian rupee, containing inflation and promoting inclusive growth;a path to high growth can be set where the Government has already done its bit by announcing reforms. The economy would reap rich rewards only when both are on the same page and efforts well-directed.
 

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