##demic, and the associated statistical break in data. during the second wave of the pandemic, which was more lethal, collecting information on sector level stress became even more important for designing targeted policy interventions. the crisis thus created the opportunity to explore and harness the power of big data, and strengthen direct feedback mechanisms while working from home. 7. the pandemic also posed new research issues and analytical challenges for policy making. these include : ( i ) whether the pandemic caused a demand shock or a supply shock, and which shock was transitory and which one durable ; ( ii ) the size and nature of policy stimulus required, and their effectiveness ; ( iii ) the relationship of national / localised lockdowns and vaccination with economic activity ; ( iv ) the extent and nature of supply chain disruptions and its impact on inflation and growth ; ( v ) the asymmetric impact of the shock / pace of recovery between contact - intensive services and manufacturing and agriculture ; and ( vi ) the impact of the shock on household, corporate and financial sector balance sheets. inflation and growth projections for monetary policy needed wider consultations with stakeholders and experts and use of survey - based data. generation of alternative nowcasts using artificial intelligence ( ai ) and machine learning ( ml ) techniques also gained more importance. 8. the war in europe brought with it new challenges, just when the economy was about to normalise fully despite the third wave of the pandemic. suddenly, the world encountered a severe food crisis and an energy crisis. 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. commodity prices skyrocketed and supply chains knotted 2 / 6 bis - central bankers'speeches further. these factors led to globalisation of inflation and policy makers were presented with a new set of research issues – understanding the magnitude and likely persistence of these shocks, the transmission channels of these shocks and the effectiveness of alternative policy tools. as countries took recourse to trade policy measures ( tariff and non - tariff ) and fiscal measures ( price freeze, tax cuts and subsidies to the vulnerable ), the suitability of such measures in the indian context also required focussed research attention. 9. as inflation in systemically important aes turned out to be persistent rather than transitory, the third shock emanated in the form of aggressive tightening of

approach. this involved strengthening the networks for direct collection of information from key stakeholders1, greater reliance on survey - based information, wider use of ai / ml techniques, and new / modified models to capture changes in the behaviour of economic 3 / 6 bis - central bankers'speeches agents to different shocks facing the economy. a full information system, with about 70 high frequency lead / coincident indicators of the economy and use of state - of - the - art models to capture the time - varying dynamics helped us to generate results that passed the tests of robustness. 13. studying the impact of the pandemic on growth - inflation dynamics and the outlook, proposing policy interventions with rationale and expected outcomes, and assessing the effectiveness of announced measures have been an integral part of the department's work all through the pandemic. for inflation analysis, increased attention was paid to interpreting prices data available from alternative sources when official data collection came to a halt during the early part of the pandemic. real time mobility indicators and market arrivals data for agricultural commodities were also put to use. it became critical to study the role of supply and demand side factors as well as the behaviour of price mark - ups in view of the lockdowns. a supply chain pressure index for india was constructed in line with the global supply chain pressure index, which is now updated and monitored regularly for policy purposes. 14. when the inflation target reset date for another five - year period was fast approaching ( starting april 1, 2021 ), a lively debate surfaced outside the reserve bank on the appropriateness of the 4 per cent inflation target with the + / - 2 per cent tolerance band. the researchers of the rbi undertook a comprehensive review of the monetary policy framework, examining all relevant issues, and recommended retention of the same target for the next five years. we accepted this recommendation and sent proposals to the government accordingly. the report on currency and finance ( rcf ) 2020 - 21 with the theme reviewing the monetary policy framework has greatly helped in providing clarity on monetary policy and issues related with the framework. 15. with the pandemic's impact lingering and supply chain disruptions persisting, an objective assessment of the scars of the pandemic and identification of reforms that could raise the country's growth trajectory became an important research issue. in the rcf 2021 - 22 with revive and reconstruct as theme, the department examined in detail the effectiveness and limits of crisis - time policies and the areas that needed policy