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RBI: Old and New
Soon after the new governor of the Reserve Bank of India (RBI), Raghuram Rajan, assumed office, a committee was constituted to examine the current monetary policy framework and recommend ways to revise and strengthen it to make it more transparent. It seems that the new governor has a certain amount of disbelief in the policies pursued by his predecessor. D Subbarao in fact had made the RBI much more independent of the finance ministry. The reaching out programme launched by Subbarao also made the RBI transparent.
Soon after the new governor of the Reserve Bank of India (RBI), Raghuram Rajan, assumed office, a committee was constituted to examine the current monetary policy framework and recommend ways to revise and strengthen it to make it more transparent. It seems that the new governor has a certain amount of disbelief in the policies pursued by his predecessor. D Subbarao in fact had made the RBI much more independent of the finance ministry. The reaching out programme launched by Subbarao also made the RBI transparent. The RBI came forward to interact with academicians, students, experts and the common man in the state-level conferences organised by it through its regional centres. Anyone who has read the Radcliffe Committee Report of 1957-58 on monetary policy, and anyone who understands the difference in the stock market sentiments of Lombard Street (long-term income expectation) and Wall Street (short-term speculative expectation of profit) would agree that Subbarao took the right monetary policy decisions at the right time. One wonders whether the new committee would be able to come out with a panacea for the fiscal-related monetary ills afflicting the Indian economy in recent times.
Mary George
Former Head,
PG Department of Economics,
University College,
THIRUVANANTHAPURAM
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