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Contents
Source: The post is based on the article “RBI’s updated strategy requires another update” published in the Livemint on 9th January 2023.
Syllabus: GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Relevance: About Utkarsh 2.0. and its concerns.
News: Recently, the Reserve Bank of India (RBI) launched Utkarsh 2.0.
What is Utkarsh 2.0.?
| Read here: RBI launches Utkarsh 2.0 for the period 2023-2025 |
What is the need for Utkarsh 2.0.?
A formal medium-term strategy document like Utkarsh 2.0. is essential for highly complicated tasks such as,
-Financial systems in almost all economies have become exceedingly elaborate, entangled and complicated. This requires central banks to detect nascent signs of financial instability which could arise anywhere in the system and turn contagious.
-In a globalized world, central banks require to watch over foreign exchange flows and manage currency-rate volatility. They also balance price stability and growth.
What are the challenges present in Utkarsh 2.0.?
The document a) Missed laying down specific challenges and a detailed plan on how RBI proposes to engage with them, b) The Core Purpose outlined in Utkarsh 2.0 is a reworked version of the Reserve Bank of India Act’s preamble. Which itself was amended and changed in 2016 as a precursor to RBI’s formal adoption of a flexible inflation-targeting regime, c) Many specific strategy points mentioned are also core to what a central bank is expected to discharge anyway. For example, The document mentioned works such as “Create a resilient financial intermediation ecosystem; refining the regulatory and supervisory framework”. These are desirable end-result, than a strategy, and d) Does not mention about climate finance or green central banking.
What should be done to improve Utkarsh 2.0.?
RBI must stay vigil to a wider range of scenarios than its strategy document. Some transparency and a feedback loop with the public will help RBI to arm itself better against future uncertainties.
