Rangarajan to Urjit Patel: Why RBI matters more to Aam Aadmi

Inflation: Although inflation has always been a key consideration for RBI while framing its monetary policy, inflation targeting has now become its primary goal. For the next five years, the target has been set at 4 per cent plus-minus 2 per cent.

Currency, equity markets: With more buoyant and broad-based equity markets (over 2.4 crore demat accounts) and over 4.6 crore retail mutual fund accounts, the RBI’s interest rate calls and guidance on the economy impact the common man more than ever. Even FII interest is huge as their net investment in Indian equities has risen from Rs 10,800 crore in 1996 to Rs 11.43 lakh crore.

Bond market: While the retail exposure to the bond market was insignificant two decades ago, it is growing by every passing day on account of retail investors investing in government securities and other debt papers through debt mutual funds. The government has also now permitted retail investors to directly invest in government securities.

Liberalised remittance scheme: There have been significant changes in regulations for remitting money abroad after the Liberalised Remittance Scheme (LRS) in February 2004 which permitted resident individuals to remit up to $25,000 a year. The current cap is $250,000 a year for buying shares or property or for studies every year. 2015-16 witnessed record outflow of $4.6 bn.