Das outlines RBI’s post-Covid research reforms

The Reserve Bank of India adapted its economic research function in the wake of the Covid-19 pandemic, governor Shaktikanta Das said on November 19.

Standard models, “information collection systems” and analytical frameworks were rendered “inadequate” by the pandemic, the governor said. As such, the RBI has revamped its approach to gathering information and analysing the economy.

“This involved strengthening the networks for direct collection of information from key stakeholders, greater reliance on survey-based information, wider use of [artificial intelligence/machine learning] techniques and new/modified models to capture changes in the behaviour of economic agents to different shocks facing the economy,” Das said.

The RBI governor said a “full information system” based on around 70 high-frequency indicators now helps researchers to capture the “time-varying dynamics” of the economy.

The system helped researchers adapt to the fast-moving nature of the pandemic shock, Das said. Now, key trends for the research team to analyse are the “trifecta” of deglobalisation, climate change and technology.

“The after-effects of the three shocks I mentioned earlier are still unfolding and would warrant constant vigil,” Das said. “The research function of the reserve bank, therefore, must remain prepared to respond to these multiple possibilities as it has done in the past.”