'GOVT SHOULD NOT TAMPER WITH BALANCE SHEET OF RBI'

IN his new book -- Just a Mercenary – former RBI governor D Subbaroa details his journey from a sainik school to Mint Road in Mumbai.

The book delves into several unknown chapters of India’s economic policy making. In an interaction with Dipak Mondal of the New Indian Express, the former RBI governor shares his view on many economic and financial issues facing the country.

You are among a long list of IAS officers who ended up heading the RBI. Do you think bureaucrats make good RBI governors?

The RBI over the last 90 years has been served by 25 governors, and they came from different backgrounds. some were economists, some came from academia, while some were civil servants like Dr (YV) Reddy and me. I don’t think you can find a correlation between the background of the governor and his performance if the governor responds to the macroeconomic situation of his time, and delivers the service. Whenever the gover nor’s position falls vacant, I think the government must draw from the entire available pool and choose the best person, not necessarily driven by a particular background.

There have been references in your book about the tussle between the government and the RBI on policy issues. Do you think central bank of a country can function completely free from government intervention?

It should, in theory, function free of interference. And, even if there is interference each of its decision and action should not be influenced by it. The RBI consults all stakeholders in determining its monetary policy. It consults banks, nonbanks, financial institutions, financial markets, economists, farmer bodies, microfinance institutions, and takes view of their suggestions and concerns. similarly, the RBI also consults the Centre because the government is a big stakeholder. The RBI should listen to all stakeholders, including the government, with an open mind, but I believe it should act in its best judgment.