Surveys To Be Conducted By RBI For Best Monetary Policy

Surveys To Be Conducted By RBI For Monetary Policy

The Apex Bank Of India -RBI announced launch of household surveys to capture  inflation expectations and consumer confidence. Reserve Bank of India regularly conducts such surveys which helps them in framing monetary policy.

RBI announced the launch of March 2022 round of Inflation Expectations Survey of Household (IESH), RBI said the survey aims at capturing subjective assessment on price movements and inflation of about 6000 households based on their individual consumption baskets across 18 cities.

What will the Survey Include?

• The survey will include quality responses from the household on the price changes in three months ahead as well as in the one year ahead period and quantitative responses on current, three months ahead and one year ahead inflation rates.
• March 2022 round of Consumer Confidence Survey (CCS) will include qualitative responses from households regarding their sentiments on general economic situation, employment scenario, price levels house holds income and spending.
• The cities include Ahmedabad, Bengaluru, Chandigarh, Chennai, Delhi, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Nagpur, Patna, and Thiruvananthapuram.

History of Surveys in the Reserve Bank of India

• The first comprehensive survey conducted by RBI was the All-India Rural Credit Survey, with 1951-52 as the reference period.
• The survey collected information that assisted RBI and the Government of India in formulating an integrated credit policy for rural credit and to assess the extent of indebtedness of rural households to financial institutions in the organized and unorganized sectors.
• The Reserve Bank of India (RBI) collects and analyses statistics on various economic transactions of banking and other financial institutions in the process of the conduct of monetary policy in India.
• While a major part of the statistics is collected through either statutory or control returns adhering to the international standards and practices that are exclusively used for monetary policy and supervision, information gaps on financial statistics and other related areas are filled up by collecting supplementary statistics through various surveys.

Surveys on Monetary and Financial Conditions

• Central banks traditionally collect information on monetary and financial conditions through censuses of banks. The development of new types of financial institutions, instruments and markets have generated new data requirements for central banks.
• New types of data collection techniques have therefore been adopted, including cut-off-the-tail reporting as well as fixed and random sampling. The new techniques allow central banks to interpolate monetary and financial conditions from samples to a broader population.

Surveys of Corporate Sector

• The non-financial corporate sector is one of the key sectors in a market economy. It produces the tradable and non-tradable goods and services demanded by the household sector and the rest of the world and offers most of the employment opportunities in the country.
• The major source of statistical information on this sector comes from the national and financial accounts. Even though considerable efforts are being made to improve national accounts data, in terms of coverage and timeliness, the information that is published is backward-looking.
• Policy makers want to have more timely data as well as indicators of business sentiment that may be driving business decisions and conditions now or in the foreseeable future. For that reason, statistical agencies have developed other tools that permit a closer monitoring of this sector.
• In many countries central banks play an important role in this area as most of the central banks carry out a survey of the corporate sector of some kind. This includes the conduct of business confidence or sentiment surveys and the collection of corporate balance-sheet data.

Surveys of Household Sector

• Households play an important role in economies and therefore it is important for central banks to understand their behaviour and expectations.
• More recently, households and financial markets have started to become more dependent upon each other as households attempt to improve the smoothening of their consumption across their lifetime and as financial markets develop services to facilitate this process.
• Central banks need to have access to household sector data that are timely, methodologically consistent, and comprehensive.
• In many countries central banks have taken initiatives to conduct surveys of the household sector. One reason is to collect information on household sentiments such as with respect to inflation expectations or consumer confidence.
• Another is to obtain more detailed information on households’ financial transactions or positions such as use of payment instruments or household assets and liabilities, including their distribution across income categories.
• The latter information can assist central banks in examining the effects of possible shocks, such as interest rate increases, on different groups of households.

 Surveys Conducted by Reserve Bank of India

The surveys conducted by the RBI can be broadly classified into four categories.

First, the monetary policy surveys including

• Industrial Outlook Survey,
• Inflation Expectations Survey For Households,
• Survey Of Professional Forecasters And
• Survey Of Inventories, Order Books And Capacity Utilization.

Second, the banking sector including

• Survey On Distribution Of Credit, Deposits And Employment In Banks (Basic Statistical Return (BSR) 1 & 2),
• Survey On Advances Against Sensitive Commodities (BSR 3),
• Survey On Composition And Ownership Of Deposits With Scheduled Commercial Banks (BSR 4),
• Survey On Investment Portfolio Of Scheduled Commercial Banks (BSR 5),
• Survey Of Debits To Deposit Accounts With Scheduled Commercial Banks (BSR 6),
• Survey On International Assets And Liabilities Of Banks,
• Co-Ordinated Portfolio Investment Survey For Commercial Banks And
• Survey Of Small Borrowal Accounts.

Third, the external sector including

• Survey Of Foreign Liabilities and Assets for Corporate, Insurance & Mutual Fund Sectors, Coordinated Portfolio Investment Survey for Corporate, Insurance & Mutual Fund Sectors,
• Survey On Software and It Services Export, Unclassified Receipt Survey Used for Bop,
• Survey On Balances in Nostro / Vostro Account Used in Bop,
• Survey On Non-Resident Deposits, International Trade in Banking Services,
• Survey On Private Remittances to India,
• Survey On Freight and Insurance Component in Indian Exports And (X) Survey Of Foreign Collaboration In Indian Industry.

Fourth, the ad hoc surveys which include

• The Census Of Non-Banking Financial Companies Not Accepting Public Deposits,
• Review Of Payment And Settlement Survey And
• Various Types Of Customer Satisfaction Surveys.

 Conclusions

• The Reserve Bank collects and analyses statistics on various economic transactions of banking and other financial institutions in the process of conducting of monetary policy in India.
• While a major part of the statistics is collected through either statutory or control returns, adhering to the international standards and practices, that are used for monetary policy and supervision, information gaps on financial statistics and other related areas as well as forward-looking indicators of macro-economic conditions are met through various surveys.
• With globalisation of the economies, greater liberalisation of the domestic financial system and increasingly deregulated markets, need for quick and forward looking information increased.
• Given the well known lags in the transmission of monetary policy, the surveys, providing a macro-economic outlook, attained greater importance. The Bank has over the past few years, initiated a number of surveys to capture timely information on the major leading indicators of economic activity.