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RBI grappling with inflation: Acharya

He said capacity utilisation in many sectors was very low, with a depressing impact on economy

Press Trust of India  |  New Delhi 

Deputy Governor, RBI, Viral Acharya
Viral Acharya, Deputy governor, RBI

A day after the ministry cast doubt on the Reserve Bank of India’s (RBI’s) forecasts, Deputy Governor on Thursday said price rise data posed a challenge and the central bank was “grappling” with it.
Acharya also said capacity utilisation in many of the sectors was very low, with a depressing impact on economic activities.

Speaking at an event organised by ICRIER here, the deputy governor said data were the challenge one was facing on important parts of that were behaving other than they had historically (in times of instability). “And let me just say we are grappling with that,” he added.
As the RBI left the key interest rates unchanged citing concerns on the price situation on Wednesday, Chief Economic Advisor Arvind Subramanian had said: “forecast errors by the RBI have been large and systematically one-sided in overstating
Acharya further said it was easy to predict in data what’s likely to repeat itself, but one couldn’t build a model necessarily of things that were completely non-stationary or one-off sort of things.
On economy, Acharya said capacity utilisation in many of the sectors right now was very low.
“But then there are times when the data are just non-stationary, and unfortunately at that point, the kind of micro data that I am talking about is really essential to understand on the ground what’s really happening,” he explained. “... it kind of raises challenges because while it is good to attribute everything to one new thing that is happening in the economy, it unfortunately makes the job of research and projections really hard because it could be that there are stationary forces also at work in the data.”

First Published: Fri, June 09 2017. 01:41 IST