Econintersect: Indian Prime Minister Manmohan Singh, a former Reserve Bank of India governor himself, approved an additional two year term for the current RBI governor Duvvuri Subbarao (photo right). The term extension is until September 4, 2013. This will give Subbarao a five year tenure, the same as his two predecessors YV Reddy and Bimal Jalan. Subbarao has served during a time of extraordinary stress, starting with the global financial crisis of 2008, continuing with persistent inflation in 2010-11 and now facing turmoil in global markets associated with the downgrade of U.S. debt by S&P.From The Times of India:
Subbarao, a career civil servant who was India’s finance secretary before taking charge at RBI, is viewed as having synchronised policy making in tune with the economic agenda of the government and staying on course in taking steps to cool inflation. When Subbarao took over, he had to cut rates to bolster confidence when growth appeared to be faltering in the second half of 2008.
However, over the past 17 months, he had to raise rates eight times to combat high inflation. Yaga Venugopal Reddy, who was the governor before Subbarao, said on Tuesday that he was delighted that the “right thing has happened”. In an interview to ET over the weekend, Reddy had said his tenure was easier except that there was criticism.
“Policy challenges for me were less than what it is for the governor now. Except that I had to face considerable criticism, particularly domestically, and so I had to defend. Problems were not so complex, but attitudes were. But now the problems are more complex.”
Global Economic Intersection contributor Ajay Shah, senior fellow at the National Institute for Public Finance and Policy, was quoted in The Times of India as saying the RBI had progressed enormously under his (Subbarao’s) watch. Ajay was further quoted:
“I hope that will continue. He has finally waged a war on inflation. I hope he will see it through to victory. Considering that he is a veteran of the 2008 crisis. His scale and judgment will help RBI shape things in the future,” Shah said.
Shah has posted numerous articles about Indian and global economic issues at GEI Analysis and GEI Opinion.
Another GEI contributor, Sunil Chandra, had recently argued GEI Opinion that Subbarao may have been too aggressive in his interest rate policy.
Sources: The Times of India and GEI Opinion
Hat tip to Sunil Chandra
Hat tip to Sunil Chandra
