RBI – Functioning and Monetary Policy

•RBI similar to FED, USA must consider Employment generated, GDP growth and other parameters when announcing monetary policy. Plainly sticking to inflation parameter alone wont help. Targeting only one parameter to announce monetary policy is outdated. Inflation – GDP – Employment are the 3 cycles based on points system must be considered.
•Employment data in India is not much clear. Govt based on PAN card information on salary credited through Banks must determine how many employed in proper sectors and unorganised difficult to determine. At least with organised sectors like Govt, Banks, IT, etc,. The employment generated can be calculated. Focussing based on that data to target monetary policy will help. If reduced employment or growth on employment less than 3% then monetary policy can be relaxed. Govt must help with providing employment data.
•GDP data on quarterly basis is not targeted. If GDP threshold is considered and below which the monetary policy will be eased should be maintained.
•RBI to target based on inflation data available or have monetary policy meeting post the quarterly data availability. RBI always pointing to next cycle is not appropriate
•Veto Power with RBI must irrespective of panel size or Equal panel size for RBI and Govt and veto with Governor to maintain status quo
•RBI does not do audit of IT facilities of banks and does not audit data. It does audits which are outdated. Nowadays IT systems have various methods to conceal data.