RBI working with ICRIER to develop food inflation projection framework

The Reserve Bank of India (RBI) is working with the Indian Council for Research on International Economic Relations (ICRIER) to develop a food inflation projection framework as the central bank looks to depend more on a consultative approach to collect first-hand data and improve policy responses.

“Many of the backward-looking models, which run on past data, may fall short of providing useful information and estimates for policy. The department (economic and policy research) must further strengthen its consultative approach to collect first-hand information directly from the stakeholders,” RBI governor Shaktikanta Das said.

He suggested consultative approaches in other areas of research as well.

“There is increasing use of Big Data and data generated by private sources for policy research. We cannot escape the fact that data is the new oil. The department may have to look at all such data, being mindful of ways to deal with misleading and noisy analysis that such data may at times throw up,” he said on Saturday at its annual research conference in Hyderabad.
He said that the pandemic forced the researchers to explore and harness the power of Big Data, and strengthen direct feedback mechanisms while working from home.

The department in the next month would repeat a nationwide survey with farmers, retailers and wholesalers to understand the changes brought out by the pandemic.

Talking about food and other critical inputs, Das highlighted a need to explore different sources in the backdrop of the war in Europe which led to a severe food crisis and an energy crisis worldwide.

“A new risk emerged in the form of fragmentation of the global economy driven by fast changing geopolitical considerations, that brought to the fore the need for reducing dependence on any single source for critical supplies,” he said.

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