Dr. Subbarao delivered the Nani Palkhivala Memorial Lecture yesterday and it was his last formal speech as the governor of the Reserve Bank of India. He clearly and correctly blames the government for India’s current economic problems/mess/crisis.
As this blogger has also mentioned several times, he correctly points out that the blame attached to RBI for tightening belatedly in 2010-11 is easier to do, in hindsight. The world looked as uncertain in 2010 as it did in 2009. Nonetheless, he was gracious to accept that charge. Further, even if was late and slow in tightening, he would not have anticipated that the government would be so derelict in its responsibilities. He clearly would not have known that it has taken it upon itself to sink India.
For those who blame ‘tight’ monetary policy for the growth slowdown, he has an effective riposte:
If the Reserve Bank’s repo rate was the only factor inhibiting growth, growth should have responded to our rate cuts of 125 bps between April 2012 and May 2013, CRR cut of 200 bps and open market operations (OMOs) of `1.5 trillion last year.
Yes, the only intellectually challenged/crippled would blame the RBI for India’s growth slowdown which is still unfolding.
He pays the obligatory tribute to the Prime Minister for having told him to keep his ear to the ground. Yes, Dr. Subbarao and his team did reach out to the public. The governor himself played a personal role in the education of the Indian public on the roles and responsibilities of the Reserve Bank of India. We have to acknowledge that here.
Of course, we also get a clue as to why the UPA did not govern but did everything else. The Prime Minister had outsourced every governance task to the RBI and not just monetary policy:
“… it is easy to forget that monetary policy is also about reducing hunger and malnutrition, putting children in school, creating jobs, building roads and bridges and increasing the productivity of our farms and firms. Keep your ear close to the ground.”
He had a good parting shot for India’s Finance Minister:
Gerard Schroeder, the former German Chancellor, once said, “I am often frustrated by the the Bundesbank. But thank God, it exists.” I do hope Finance Minister Chidambaram will one day say, “I am often frustrated by the Reserve Bank, so frustrated that I want to go for a walk, even if I have to walk alone. But thank God, the Reserve Bank exists.”
We should also applaud him for invoking Dharma in the last paragraph of his speech:
A nation prospers only if its public institutions are guided by dharma. The Reserve Bank of India tops the list of India’s public institutions that are guided by Dharma and Dharma alone.
I recall the words of French-born Indian and Indologist Mr. Michel Danino at my son’s Upanayanam ceremony in February this year at Madurai that Dharma was the unwritten constitution of India.
Farewell to Dr. Subbarao who had to go through a very tough tenure handling the fallout of a global crisis with an unfriendly, unresponsive, unhelpful, incompetent and venal government.
Overall, TGS assigns a letter grade of B+ to the Governor with a GPA of 3.6 to 3.8 out of 5.
May he enjoy a well deserved break from working for a mostly ungrateful government and may his retirement be full of good health and peace of mind.