I paid the price for asserting RBI's autonomy: Subbarao

I paid the price for asserting RBI's autonomy: Subbarao: In his book, former governor says Chidambaram, Pranab were piqued by his tight rate policy; refused extension to two deputies...


GOI & RBI: Relationship issues

The highlights from former RBI Governor Dr D Subbarao’s book “Who Moved My Interest Rate-Leading the Reserve Bank of India Through Five Turbulent Years” may not come as surprise revelations for RBI watchers. Still, Dr Subbarao deserves a special thanks for putting together the thoughts of the well-wishers of India, in a manner that should pierce through the stubborn bureaucrats in the Finance Ministry and the ‘seasoned’ politicians who danced to their tunes during the period covered in the book.
The fig-leaf that tried to uphold an impression that the relationship between GOI and RBI is unlikely to break, come what may, has been removed. The highlights also explain why Dr Rajan is waiting for the end of the current term to leave Mint Road.
In an article written on Dr Raghuram Rajan in August 2013, when his appointment as 23rd Governor of RBI was announced, I had suggested Dr Rajan read History of RBI,Volume I. My present suggestion for the prospective 24th Governor is to own a copy of Dr Subbarao’s present book and get back to it whenever the choice is between advice of conscience and the expectations of political leadership or ‘veterans’ in the finance ministry.
S S Tarapore used to write that RBI Governor and his deputies have constraints as their continuance is at the sweet will of GOI. The finance ministry interference does not stop with policy issues affecting economy, but percolate to minor HR-related wage and pension matters governed by independent statutes and regulations(Despite existence of a fund with a corpus of over Rs10,000 crore, GOI is standing in the way of updation of pension of those retired from RBI from 1997!). If successive RBI Governors and their deputies are fighting for RBI autonomy and falling, time is opportune for a review of GOI stance on the issue, to restore the prestige of India’s central bank in national interest.
M G Warrier, Mumbai



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