Subbarao’s legacy: He repeated history as farce and tragedy
...........However, blaming Subbarao for the latest macroeconomic crisis would be as unfair as blaming him for the negative impact of the global meltdown on India. The fact is that no other Governor in recent history has faced such dire crises (not of their own making) at both ends of their tenure – Bimal Jalan dealt with the Asian crisis at the start of his tenure. Subbarao’s record must be judged in this unusual context. Unfortunately, even then, he will be remembered as the RBI Governor who picked the wrong battles to fight......................
2 comments:
It is too early to pass judgments on Dr Subbarao’s tenure as RBI Governor. Former RBI Deputy Governor S S Tarapore described the purchase of 200 tonnes of gold in 2009 to diversify the forex reserves as one of Governor Subbarao's outstanding achievements and said that ‘history would etch his name in gold’. Initially, it is common knowledge that, he was picked up under the presumption that he would be “North Block’s representative” at Mint Road. But he quickly started talking with elegance and dignity that have got deeply scripted in RBI’s tradition and did not hesitate to change his own views which were based on the information given to him by ‘Babus’ in North Block. The academic background coupled with IAS grooming helped him have his way when intuition told him that the central bank’s policy has implications much beyond immediate political gains or the 2014 Election prospects. Among other things his tenure as Governor will be remembered for the transparency in policy perceptions, the message that government and central bank can have different perceptions on inflation and growth and still co-exist, bringing back the focus on financial inclusion and ‘knowing when to stop’.
If Dr Reddy, his predecessor from the same cadre has attracted global attention, Dr Subba Rao, like none of his predecessors has been attracting the columns of the media domestically. Unfounded criticism of his policy pursuit that happens to be the basic vanguard function of the RBI against rising inflation is highly regrettable. The falling rupee is in fact, a market correction and it is very likely to stop at the current level of Rs.65 a dollar even amidst the real of Brazil similarly performing among the BRIC nations and even China showing decline in growth rates against not so rising interest rates or inflation.
In fact, Dr Subba Rao's regime faced both policy paralysis of the government and unstable global financial situation accentuated by the huge sovereign debt of Europe and Greece furthering the recessionary impact. His posture of upholding the independence and autonomy of the RBI as the regulator would be remembered in the economic history of India as only a savior.
Post a Comment