Deepak Mohanty: Statistics and the Reserve Bank - recent developments
and perspective
Opening remarks by Mr Deepak Mohanty, Executive Director of the Reserve Bank of India,
at the Annual Statistics Conference 2013 of the Reserve Bank of India, Mumbai, 22 March
2013.
* * *
1. Deputy Governor, Dr. Urjit R. Patel, Shri A. B. Chakraborty, Officer-in-Charge,
Department of Statistics and Information Management (DSIM); heads of select central office
departments; distinguished statisticians and economists from the academia; and friends. I
extend a warm welcome to you all to the Annual Statistics Conference 2013, organized by
DSIM. This conference provides a platform to the officers of DSIM to present their research
work before the experts and receive their feedback in order to make the analysis more
meaningful for policy and research. I thank the distinguished professors who have consented
to discuss various papers prepared by my colleagues in DSIM: Prof. Manoj Panda (Director,
Institute of Economic Growth, Delhi), Prof. N. R. Bhanumurthy (NIPFP, New Delhi),
Prof. Tathagata Bandyopadhya (IIM, Ahmedabad), Prof. Rajendra Vaidya (IGIDR, Mumbai),
Prof. Chetan Ghate (ISI/ICRIER Delhi), Prof. Pulak Ghosh (IIM, Bangalore),
Prof. T. V. Ramanathan (Pune University). You all bring together plenty of expertise and
experience in the field of theory and practice of statistical research for economic policy
making which is of great value to us.
2. I have said it earlier that Statistics is a public good. As a central bank, we are
responsible for generating various macro-financial statistics collected both from primary and
secondary sources in the process of implementing our policies. We use statistics and
statistical tools extensively to aid informed policy making. Therefore, a solid statistical
grounding and soiling the hands with data are basic prerequisites for the making of a good
empirical economist. This is evident from the presence of many eminent economists
amongst us in this conference.
3. Let me recapitulate briefly about the outcome of the 2012 conference in the context
of major developments that took place in the statistical activities during last one year. In the
last year's conference, DSIM researchers presented 12 technical papers. Subsequently
these papers were revised based on the feedback received from the external experts.I am
happy to note that 5 papers have been already submitted for publication in RBI Working
Paper Series/ RBI Occasional Papers/outside journals and others are in various stages of
completion.
4. The research activities of the Department encompass measurement of economic
indicators, analysis, modelling and forecasting of economic growth, inflation, corporate
performance and capturing economic agents' response to expected macro developments for
forward looking monetary policy formulation. Based on various univariate and multivariate
models, projected path of growth and inflation is presented in the form of fan charts. In the
current economic scenario, the analysis of growth-inflation trade-off, exchange rate
passthrough and inflation persistence carried out by the Department was particularly useful for
calibrating monetary policy actions.
5. Last year, the conference outlined several data and dissemination initiatives for
better harmonisation and synergy between data producers and users. I am happy to note
that the department has released a new user friendly interface of Database on Indian
Economy (DBIE) and has transformed data warehouse utilities into a major production tool of
the Bank. All the major statistical publications of the Bank, as well as all the tables of RBI
Bulletin and Weekly Statistical Supplement (WSS), are now generated directly from DBIE.
6. The previous conference also emphasised the need for initiatives for improving
banking data with regard to quality, coverage, presentation and dissemination. It was
deliberated that data quality and coverage issues require a collaborative effort across the
various regulatory, research as also policy departments so as to harmonize the reporting of
data. In this connection, the Department had several rounds of interactions during the year
with RPCD and DBS to address these issues and resolve the same. Regarding harmonizing
the reporting of deposits and credit data at granular level, action has been initiated for
codification of the input data structure at the data processing and reporting systems of banks
as per the classification and coding system followed for the BSR system. The main objective
is to source all these data from the banks' CBS platforms so that data reported by the banks
to various departments of the Reserve Bank become consistent with the granular databases
maintained by the banks. In order to take these initiatives forward, this conference has two
structured panel discussions with participation of the stakeholder departments of the Bank.
The outcome of the discussion today and tomorrow is expected to pave the way for
availability of quality banking statistics.
7. On the operational front, the department conducted a survey on demand and usage
of coins across 12 centres, prepared a research paper on estimating counterfeit notes in
circulation, and provided statistical basis of estimation of agency commission of commercial
banks undertaking government business.
8. The surveys conducted by the department particularly on macroeconomic changes
continue to provide valuable inputs for forward looking monetary policy formulation. These
include Industrial Outlook Survey (IOS), Order Books, Inventories and Capacity Utilisation
Survey (OBICUS), Credit Conditions Survey (CrCS), Inflation Expectations Survey of
Households (IESH), Consumer Confidence Survey (CCS) and Survey of Professional
Forecasters (SPF). Key findings of most of these surveys are now published on the RBI
website simultaneously with the Macroeconomic and Monetary Developments every quarter.
This has increased visibility of our survey output and has improved considerably the
timeliness in dissemination of survey results. However, this has also increased our
accountability of research outputs and responsibility of maintaining good quality statistics.
Technical skills of our survey data analysis is now implicitly under public scrutiny.
9. For guidance on technical issues related to surveys, a high level Technical Advisory
Committee on Survey (TACS) has been constituted. During the year, coverage of IESH
survey has been extended to four more centres covering a total of 16 important centres. Pilot
Survey on Employment of Fresh Graduates from Technical Institutions was conducted during
June-August, 2012 to collect placement data for 2010-2011 and 2011-2012 from
61 engineering and management institutes to assess trends in employment opportunities of
fresh graduates. House price index compilation has been extended to 4 more cities, covering
now total 10 cities. Further, in order to complement this, the Department has successfully
introduced an Asset Price Monitoring System (APMS) based on housing loan account
information available with banks.
10. A dynamic database called "Branch Locator" was released in the Bank's website
providing detailed information (like location, type of business) on branches of commercial
banks. This has helped banks in accessing locational information for branch expansion and
financial inclusion. Scope of BSR-4 survey, one of the key RBI survey tailored for estimating
household savings in the form of bank deposits, hitherto conducted on a sample basis, has
been widened to a census from March 2012. The scope of BSR-7 was also expanded to
collect data on deposits by type (current, savings and term) from March 2012 quarter. A
Standing Monitoring Group has been constituted to implement enhancements to IBS as
recommended by the BIS Committee on the Global Financial System (CGFS).
11. In India, analysis of monetary policy transmission was constrained due to absence
of effective lending rate data of banks. In this context, in a research paper, the department
provided a comparable annual time series data on weighted average lending rates (WALR)
for bank credit for major sectors in India for the period 1992-2010 based on the
comprehensive account level BSR database. This information bridged an important data gap
for empirical assessment of the bank lending rate channel of monetary transmission.
12. In the current macroeconomic scenario, the issue of wage price spiral and inflation
has resurfaced and has been a topic in public discourse. In this context, the department
compiled a long time series data on rural wage rate based on the data contained in the
Labour Bureau Journal for 18 occupations for all the major states as well as at all India level.
This is a monthly data base starting from July 1995 to November 2012 (latest) and is
available to the public in a user-friendly format in the data warehouse.
13. Regional market intelligence or statistical intelligence plays a pivotal role in providing
important inputs to monetary policy and many central banks have established statistical
system for gathering regional information. With its reorganised structure and wider presence
of regional offices in major centres, the Department has put in place a similar system of
gathering relevant statistics and market intelligence, particularly in the area of prices of
essential commodities. This system is potentially useful to gauge an early signal of price
pressure across commodities before the official data release. Also this data is useful in
validating the price trends as available in official price indices like WPI and CPI.
14. The reporting of purpose code under Foreign Exchange Transactions Electronic
Reporting System (FET-ERS) was extended to all foreign exchange transactions, including
small receipt transactions, on a census basis from April 1, 2012, as suggested by the Central
Board. The resultant transition helped India to become one among the pioneer countries to
implement BPM6 standards for BoP reporting. Information on International Investment
Position, Co-ordinated Direct Investment Survey (CDIS), Co-ordinated Portfolio Investment
Survey (CPIS) (for Mutual Funds, Insurance and Private Corporate Sector) are dissemination
as a part of the commitment in adherence to the SDDS framework of IMF and G-20 data
gaps initiatives.
15. The XBRL project under the High Level Steering Committee (Chairman: Shri Anand
Sinha, Deputy Governor) on standardisation in reporting of financial data has made
considerable progress during the year. The second phase of this project has been taken up
covering 43 returns (22 OSMOS returns, 16 external sector returns of FED and DSIM and
5 returns of UBD). XBRL reporting is being integrated with the data warehouse and will be
the only platform for receiving and validating all the incoming data in due course.
16. Central banking today is more challenging than ever and availability of reliable and
timely information is the key to effective policy making. The statisticians in the Reserve Bank
perform a multifarious role. While the department has many achievements in the past, let me
share a few challenges for the Department going forward.
First, data gaps are an inevitable consequence of the ongoing development of markets and
institutions. As has been true of previous international financial crises, these gaps are
highlighted when a lack of timely, accurate information hinders the ability of policy makers
and market participants to develop effective responses. Indeed, the recent crisis has
reaffirmed an old lesson - good data and good analysis are the lifeblood of effective
surveillance and policy responses at both the national and international levels. In this
context, G-20 data gaps initiatives have provided a statistical framework across nations
which are consistent and comparable. DSIM, being the nodal department in the Bank, has a
major role in taking this initiative forward.
Second, there are some surveys on macroeconomic changes which merit further thrust. We
have made a beginning on collection of data on employment opportunities of fresh
graduates. We need to have better understanding of the potential demand pressure in the
economy. In this context, an important indicator which provides early signs of overall
economic activity is retail sales. Many central banks are effectively using the retail sales
data. A quarterly survey on retail sales across cities may be initiated with the help of regional
offices.
Third, while the Department has developed the database on rural wage rate, there is an
urgent need to understand the wage price development in the urban sector. Towards this,
quarterly corporate results could be suitably examined in order to provide time series data of
urban wage.
Fourth, the Department is involved in various data gap and statistical measurement issues
through its participation in various committees within and outside the RBI. One particular
issue that has received renewed attention recently is the development of a Producers Price
Index (PPI), including services. While this is presumably an institutional effort being made by
the Government, work relating to a statistical framework of PPI in Indian context could be
attempted by the department.
Fifth, during last 5 years or so, statistical systems both for financial and banking, have
undergone a major change. New systems are introduced in line with global standard of data
compilation and dissemination. In this context, efforts should be made to update the "Manual
on Banking and Financial Statistics", which was published last in 2007.
Sixth, while the department has made considerable inroads towards collection of forward
looking information for monetary policy formulation, our effort on financial inclusion surveys
has been limited. Financial inclusion is policy priority of the Bank. Therefore, it is necessary
for the department to engage itself in formulation and undertaking of surveys on financial
inclusion, particularly assessment of financial inclusion outcomes in the villages following the
outreach programme of the Bank, in collaboration with RPCD and its regional offices.
Seventh, the Department has noticeable presence in a number of central office departments,
like Monetary Policy Department (MPD), Department of External Investment and Operations
(DEIO), Internal Debt Management Department (IDMD), Department of Information
Technology (DIT), Department of Payment and Settlement Systems (DPSS), Department of
Banking Supervision (DBS) and Financial Stability Unit (FSU). It is desirable that our officers
in these departments provide analytical inputs for policy and operational issues and come out
with research papers. These papers could be presented in conferences and published
eventually in the RBI Working Paper Series. This will make research more valuable in
furthering our organisational objectives.
Eighth, focused and determined approach to research across various units, including the
regional offices, should be pursued so that research agenda being adopted by the
Department is accomplished in a timely manner. For data management and dissemination,
technology must be harnessed to its fullest extent. There is also a need to strengthen the
modelling and forecasting capabilities towards developing a full-fledged forecasting suite
including DSGE models.
17. Finally, I conclude with a quote from the famous statistician John Tukey: "The best
thing about being a statistician is that you get to play in everyone's backyard." I see limitless
opportunities for a statistician as the demand for statistical skills and statistics in the Bank
keeps growing as we grapple with many questions. I hope the deliberations of this
conference will bring academics and policy makers closer and lead to strengthening our
statistical analysis and system. I wish the conference all success.
18. Thank you.