RBI Governor believes in the 'Wisdom of Crowds'.

In his excellent and readable speech on Central Bank communication dilemmas, the RBI Governor Dr Subbarao made an interesting point regarding seeking public opinion before actual policy framing. He said

Communication can be a potentially powerful tool for getting feedback when the implications and the impact of proposed policy are uncertain. For example, the Reserve Bank has thrown open the issue of whether we should deregulate the interest rate on savings accounts, which incidentally is one of the very few interest rates that remains administered. There are persuasive arguments both for and against deregulating this. In the Reserve Bank, we realized that this is, like all big decisions, a judgement call and that we needed the ‘wisdom of the crowds’ in reaching a judgement. Discerning people would no doubt have realized that eliciting views and feedback is now standard practice for most policy decisions of the Reserve Bank.

The RBI has become far more transparent than it a year ago, with periodic conference calls and transcripts. Given the remarkable foresight of the RBI in averting subprime fallout on India, it could well have stuck to its old ways. But being more transparent shows that even winners can learn from others.