Communication lessons for the RBI governor
Raghuram Rajan finds himself in the middle of a controversy. Again. You can call it a media-created ruckus, but a ruckus it is
Mumbai: On Tuesday morning, communication agency Communique Public Relations and Marketing sent out a press release with details of the inauguration of the Meghnad Desai Academy of Economics. At the event, which was held on Monday, the governor reportedly spoke about a bunch of economic issues including inflation targeting, the use of forex reserves and bad loans. The event was closed to media.
While there was nothing earth-shattering in the governor’s comments, there were some issues of current relevance. According to the first press release issued by the agency, the governor said that inflation target should not be revised every three years as suggested by the new draft of the Indian Financial Code. He added that forex reserves should not be tied up in illiquid projects and finally spoke on bad loans in the banking sector. Despite pressure not to call stressed assets as non-performing assets, it is important to recognize and account for these assets as such, the governor reportedly said.
Mint could not verify whether these comments were actually made or the exact wording of the comments since it was closed to reporters.
The issue spiralled when the agency withdrew the press release saying it did not accurately reflect the governor’s comments. The revised press release that came later in the afternoon had none of the governor’s comments on the economic issues. (Mint published the revised release with a note to readers on the changes made)
The confusion appears to have once again arisen out of the governor’s need to speak freely in front of students. That is perhaps why the event was closed to the media and why a copy of the governor’s speech was not released.
This is not the first time that the governor’s need to speak off-the-cuff has led to confusion. Earlier this year, the governor’s comments on capital account convertibility had been misconstrued. There was also an instance where theoretical comments on interest rates had been understood by the markets as a signal of rates in the current environment.
The lesson to be learnt from such examples is that a high-ranking official cannot hope to speak candidly in today’s hyper-connected world, unless he intends to send out a message. The concept of “closed to media” does not exist anymore since anyone attending an event can act as media and put out the message on social media. In some ways, everyone can be a journalist today. Whether that is right or wrong is a different debate. It is what it is.
RBI and perhaps all top officials need to recognize this and adjust their communication accordingly. RBI currently has a committee to review the central bank’s communication strategy. It is important that they help frame this revised communication strategy while keeping in mind the realities of today’s hyper-communicated world.