Responding to a Right to Information (RTI) appeal, the Reserve Bank of India (RBI) has said that revealing remedial measures meant to contain inflation, and shared with the government after it failed to meet the flexible target last year, could lead to market disruptions and cause financial market volatility, the Mint reported.
The section of RTI Act cited by RBI is used to exclude sharing of information which could affect the sovereignty and integrity of India, security, strategic, scientific or economic interests of the state, relations with a foreign state, or lead to incitement of an offence.
Talking about the confidential correspondence from RBI to the government, the central bank said that public disclosure of confidential communication from RBI to the government, especially containing remedial actions, can “unmoor expectations and impede monetary policy transmission”. This, in turn, can dampen growth prospects and hurt the state’s economic interests, the RBI said, as mentioned in the report. According to the report, “The information is exempted from disclosure under Section 8(1)(a) of the RTI Act as it may prejudicially affect the economic interests of the state,” RBI’s central public information officer Manish Kapur said.
Mint had filed an RTI request asking for the details of the communication between the central bank and the government. In December, the RBI rejected the RTI, citing the said section without specifying a reason. When Mint appealed this decision, the appellate authority asked the CPIO to review the response.
The report mentioned the debate on disclosure of the RBI’s failure to meet the flexible retail inflation target of 2-6 per cent for three straight quarters between January and September, which is at the core of the issue.
The RBI Act of 1934 was amended in 2016, and as per Section 45ZN of the Act, RBI must explain its failure to the government, suggest remedial actions, and provide an estimate of the time period within which it will meet the target, the report added.
The monetary policy committee (MPC) of the RBI met on 3 November to discuss and draft the report, which was then submitted to the central government. That letter has so far been kept away from the eyes of the public, citing reasons that range from confidentiality clauses to the lack of provisions for releasing it. However, some experts said that disclosing the letter would, in fact, be in the public interest, the report said.
Mint made a further appeal to the initial decision of RBI which led to the appellate authority asking CPIO Kapur to revisit his response. Subsequently, responding to the appeal, Radha Shyam Ratho, an executive director at RBI said, “The letter of the Central public information officer (CPIO) is completely silent as to which clause of this provision is attracted in the present case and how it is getting attracted,”.
