World encounters food, energy crisis: RBI Governor Shaktikanta Das

New Delhi: The war in Europe brought with it new challenges, just when the economy was about to normalise fully despite the third wave of the Covid-19 pandemic and suddenly, the world encountered a severe food and energy crisis, Reserve Bank Governor Shaktikanta Das said on Saturday.

Delivering the inaugural address at the annual research conference of the Department of Economic and Policy Research of RBI here, Das said the Covid-19 pandemic crisis created an opportunity to explore and harness the power of big data and strengthen direct feedback mechanisms while working from home. He further said the pandemic also posed new research issues and analytical challenges for policy-making as it caused a demand shock or a supply shock, the size and nature of policy stimulus required, and their effectiveness, among others. The RBI Governor said the first major challenge was data collection during the first wave of the pandemic and the associated statistical break in data. During the second wave which was more lethal, collecting information on sector level stress became even more important for designing targeted policy interventions.

"The war in Europe brought with it new challenges, just when the economy was about to normalise fully despite the third wave of the pandemic. Suddenly, the world encountered a severe food crisis and an energy crisis.

A new risk emerged in the form of fragmentation of the global economy driven by fast changing geopolitical considerations, that brought to the fore the need for reducing dependence on any single source for critical supplies," Das said.

Commodity prices skyrocketed and supply chains knotted further. These factors led to globalisation of inflation and policy makers were presented with a new set of research issues – understanding the magnitude and likely persistence of these shocks, the transmission channels of these shocks and the effectiveness of alternative policy tools, the regulator said.