After spending 5 years at Mint Street, Duvuuri Subbarao will demit his office as the Reserve Bank of India (RBI) governor on Wednesday. Here are some of the highlights of his stint at the central bank: Turbulent times: Subbarao’s term at RBI was marked by the most turbulent times in the global financial markets in recent years. He took reign at RBI in September 2008, a few weeks before the collapse of the US investment bank Lehman Brothers followed by the worst global recession since 1930s. In September 2011, his tenure was extended by two years, a few days after S&P downgraded credit rating of the United States triggering a shock wave across the globe. His term is now coming to an end a few days after the Indian rupee hit its lowest value against the US dollar. War on inflation: Fighting inflation was the major highlight of Subbarao’s term at RBI. And he has successfully managed to reign in price rise. Inflation has come down from double digit figure to a more comfortable level. The wholesale inflation dipped below 5% in April this year for the first time in 40 months. Tight monetary policy: Under Subbarao, RBI became the most hawkish central bank in the world. It raised policy rate by 3.5% between April 2009 and September 2011, following a tight money policy to fight high inflation. Rupee’s free fall: The Indian currency hit a new low at the tail end of Subbarao’s tenure. Rupee has lost more than 30% of its value against the US dollar during his term. The US central bank, Federal Reserve’s, decision to wind down the stimulus package is seen as the main reason for the rout in rupee. But RBI seems to be fighting a losing battle despite taking several capital control measures, which are proving to be counter-productive. Growth slowdown: Indian economy has slowed down considerably over the past 3 years, after recording a 9.3% growth in 2011. It is showing the slowest growth in a decade now. Fear is that the GDP growth this year will be below 5%. Economic slowdown is largely because of the policy paralysis at the Central government, which failed to carry forward the reforms measures. RBI is the boss: Subbarao fiercely maintained the RBI’s independence, resisting toeing the line of the north block on my occasions. There were several instances where he was under pressure to tweak policies from government, but he fended them off and maintained RBI’s autonomy. Demystify RBI: Demystifying RBI by removing the ‘black box’ image became one major goal Subbarao set out to achieve at the central bank. “For an outsider looking in, the RBI is like a black box. Everyone knows people in there do important things, but cannot figure out the connection between that and their lives,” he said in a message to his colleagues at RBI. Subbarao increased communication with the markets. Under him, the RBI started publishing a weekly schedule of the governor’s and deputy governors’ public speaking engagements on its website. Subbarao also introduced a ‘guidance’ section in his monetary policy statements to provide investors with more visibility on monetary policy plans.
Posted on: Tue, 03 Sep 2013 10:28:44 +0000
Trending Topics
Recently Viewed Topics
© 2015