michael debabrata patra : fifty years of indian banking through the lens of basic statistical returns keynote address by dr michael debabrata patra, deputy governor of the reserve bank of india, at the conference on " bsr @ 50 ", organised by the reserve bank of india, mumbai, 28 october 2022. * * * dr. r. b. barman, former chairman, national statistical commission, shri s. h. saoji, dr. a. k. nag and other former colleagues who contributed richly to the basic statistical return ( bsr ) system, senior officials from banks – i am glad to see many chief compliance officers ( ccos ) of banks participating today – executive directors and other colleagues from the reserve bank, ladies and gentlemen, 2. today, we celebrate the 50th year of the bsr system and pause to reflect on the way forward. any system which has served us for half a century would surely have inherent strengths and depth. i believe that as an exhaustive data collection system, the bsr has endured the test of time. the development and maintenance of such a large system is demanding, to say the least, and it calls for constantly adapting to emerging realities. for this, i compliment my colleagues from the department of statistics and information management or dsim. the reserve bank has always strived to ensure that its policies are data - driven and, in fact, data - intensive. accordingly, the reserve bank forms a significant part of the national statistical system. our early publications, most of which have now been digitised and placed on our website, profile the emphasis that the reserve bank has placed for decades past on information gathering systems, censuses and surveys to secure meaningful inputs for policy making as well as to disseminate a wide and rich pool of information as a'public good '. the bsr is a central feature of this hallowed history. in fact, the bsr has been a silent sentinel watching over the transformation of india banking, and that is theme of my address today. 3. for india, banking services serve as the lubricant that turns the wheels of the economy. in the early years, agricultural finance became a priority for the reserve bank, but comprehensive information for fashioning policies with the chisel of objective assessment was a yawning gap. way back in august 1943, the reserve bank wrote to all the state governments about and i quote from that correspondence, " having sample enquiries

this situation changed suddenly and drastically with monetary policy adopting the stance of " higher for longer " rates to fight inflationary pressures, following the war in ukraine. such regime shifts in the presence of debt overhang in an environment of high interest rates and low growth raise concerns on macroeconomic stability in many countries. higher interest rates not only raise the interest servicing burden of heavily indebted countries but also impact the balance sheet of banks and financial institutions, as it was seen during the recent banking sector turmoil in advanced economies. in an extreme sense, high indebtedness of countries may constrain monetary policy due to sharp trade - off between price stability and financial stability. third, globalisation had boosted the global economy by enhancing productivity, creating global value chains and free movement of capital and labour across countries. the benefits of globalisation, however, had reached unevenly across countries. given the recent trends of geo - economic fragmentation, industrial and trade policies worldwide are undergoing a shift. several economies are now reshoring, nearshoring and friendshoring 1 their production processes on security and strategic considerations. consequently, there is growing trade fragmentation, technological decoupling, disrupted capital flows and labour movements. all of these do not portend well for an integrated global market for goods and services. fourth, from emerging market economies ( emes ) perspective, disruptions in trade flows in food, energy and critical industrial inputs due to recurring geopolitical flashpoints and disturbances in key trade routes are raising concerns for food security and macroeconomic management. moreover, in view of the volatility in financial markets and capital flows, these countries remain vulnerable to external shocks. in such an environment, creation of domestic buffers in terms of strategic reserves of critical commodities as well as a strong umbrella of forex reserves become imperative for the emes. fifth, macroeconomic models used by central banks so far have mainly focused on the demand side of the economy. enough emphasis was not given on supply side factors. the pandemic, followed by the war, and the resultant supply chain disruptions have brought in a sharp focus on the supply side. overlapping supply shocks, as we saw recently, led to persistent inflationary pressures even when aggregate demand was not unreasonably high. in this context, the role of governments in managing the supply - side 3 / 6 bis - central bankers'speeches or cost - push pressures on inflation has increasingly gained wider acceptance. going forward, a better understanding of the supply