Are we back to another episode of that dreary old play: FM vs RBI Governor? The Finance Minister is a man in a hurry with a job to do — restore growth. D. Subbarao has a year left in office. Will this be his finest hour? Or not?
.....It had to happen. The political imperative, not to mention the exalted ego of finance ministers — honourable exceptions excepted — lead them not only to over-rule economic prudence but also straight into a joust with their tedious minder, that long suffering old maiden aunt — the Reserve Bank of India (RBI). Thus, the seat has not even warmed up and P. Chidambaram has announced his intent: He will reduce interest rates. And if you think he is telling the RBI “be quiet, Aunty, I am here now and all is well”, well, that’s your problem, isn't it?.......
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1 comment:
Unlike the appointments of the present CAG or for that matter the present RBI Governor, the re-appointment of P Chidambaram must have been a conscious decision taken after weighing the pros and cons of his being a BPL (Businessman-Politician-Lawyer) 3-in-One combine meant to make up for the deficiencies in the coalition-infected UPA-II. The writer has purposely ignored the possibility of the confusion PC can create by the variations among his loud statements meant for his B-component, his body language addressing the political class and what he really thinks and does keeping in view what would do good for the nation and his own career advance.
With certainty of less than a year left in office, we can rest assured that Governor Subbarao will continue to speak loudly and walk his talk within the given contours of legislative mandate. He has made it clear long back that tinkering with ‘rates’ is just one of the so many things expected of RBI and he would oblige North Block provided some reciprocity by fiscal policy support is forthcoming. He is a person acceptable to PC and let us hope the combination achieves the desirable result, namely a sustainable marriage between fiscal and monetary policies.
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