........When Chidambaram returned to the Finance Ministry from another corner in the North Block -- Home Ministry -- only a little over a year was left of Subbarao's extended five-year tenure. Subbarao's predecessor Y V Reddy also had skirmishes with the North Block on the issue of autonomy and fiscal consolidation. However, the finance minister showed his disappointment with monetary stance taken by Subbarao when the former had already announced a five-year fiscal consolidation road map. Rajan is still in the honeymoon period. Criticizing the governor from the beginning itself would take sting out of the criticism, analysts say. Moreover, taking on Rajan is not the same as opposing Subbarao's policy since the former is renowned world over for his commentaries on the financial world..........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
1 comment:
From what we get to read in the media, Dr Rajan has quickly(as compared to his predecessors ) learnt the art of reframing his arguments to convince North Block that RBI is an institution with an identity which needs to be protected in national interest and the central bank needs the fiscal policy and real sector reforms support from GOI.
His IMF background has not uprooted him from the Indian context and he is not hiding his anxiety to protect the interests of the majority of the country’s population which lives below the internationally accepted poverty line (per day expenditure of $2).
RBI since at least the dawn of independence, has taken on itself the responsibilities relating to institution building and credit deployment for various purposes depending on priorities of the governments of the day, in addition to the central bank’s core functions. The Indian central bank’s focus on financial inclusion and taming inflation which are in tune with the vision expressed by Dr Rajan before taking over as Governor.
By now, he has got a feel of the constraints with which RBI has been having a tight rope walk in harmonizing the monetary policy in recent times with the unbridled fiscal policy guided by pulls and pushes of a coalition government at the Centre. Finance Ministry has been asserting ownership rights over RBI almost in the same way it has been handling PSUs by interfering even in RBI’s internal HR matters.
The FM who put his Secretary Dr D Subbarao as the Governor of RBI hoping to have a submissive Governor found a different person in Subbarao soon after he started functioning from Mint Road. In that context, perhaps, it will need some introspection, a willingness for give and take and lot of luck only can save the FM from being ‘second time’ unlucky.
Post a Comment