Meaningful Minutes

Monetary policy commentary:

One of the key responsibilities of the RBI is to decide the monetary policy. This includes fixing key interest rates, stabilizing the rupee, and sale or purchase of Government bonds. This is very important, as it affects the entire economy, its growth, inflation, the exchange rate, corporate profitability, stock markets as well as individuals. The first portion of the bulletin is a detailed report about the changes in the policy and reasons for the same.

Inflation outlook:

The bulletin regularly contains commentary from RBI’s public statements on inflation. The credit policy statement, if announced in the month gone by, explains factors that could influence inflation in the future. A key aim of the RBI’s monetary policy is to curb inflation.

Macro-economic review:

This quarterly survey is published ahead of the credit policy and included in the subsequent monthly bulletin too. It looks at the overall performance of the economy. It states the key risks that hamper growth, the positive factors that will improve economic conditions, and so on. The report also gives the RBI’s estimates of economic growth for the fiscal year. Since companies are directly affected by overall economic conditions, the review helps understand how companies are likely to perform in the near future. This in turn will affect the markets.

External sector:

In a globalised world, every country trades with another. Even companies borrow money or lend directly in international markets. All this forms the external sector. The higher the debt in a country’s external sector, the greater are its risks. India’s current account deficit – the amount it owes to the world – rose nearly 10-fold in the past five years. This is one of the key reasons for the rupee’s fall. An entire section in the bulletin is usually devoted to this aspect.

Special articles:

Every now and then, the RBI researches on very specific subjects like housing prices, impact of high interest rates on companies, use of electronic payment systems, etc. The resulting reports are a wealth of information, and come very handy in understanding how the economy functions. These are either special articles or speeches by the RBI governor or deputy governors. They reflect the RBI’s assessment of the economy.

Financial system:

As a regulator of the banking sector, the RBI closely monitors the strengths and risks of the industry. This includes banks, non-banking finance companies (NBFCs), currency circulation, money supply, and so on. The monthly bulletin publishes reports on asset quality, growth in loan growth, growth in deposits among other things. These help identify growth areas, stress factors, and so on.

Government accounts:

The RBI is also the central government’s banker. It thus regularly publishes data about the state of the government’s finances – its borrowings, expenses and so on. This helps estimate if the government is going to spend more than it earns.