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No love for Subba Rao

RBI Governor Subbarao never inspired the love and reverence like his predecessor Y V Reddy did. 

I don't like this guy too. With that disclaimer, let me proceed.

Subba Rao inherited the tumultuous times. Though these rough seas were superlatively navigated by YV Reddy, that was never the case for RBI under Subba Rao.

Its initial bickering against cutting rates were justified under the uncertain times globally, however the prolonged and almost reality-divorced raising of rates were absolutely absurd and clearly wrong. Its probable that Subba Rao, bitten by the late 2009's food spiral, really wanted to avoid such a situation again. But instead of concentrating on growth and promoting it, the obsession with controlled inflation were India's undoing.

A major blame has to be shouldered by government for not having done anything whatsoever remotely useful in past many years. Add to the tight fist of RBI, the money supply and velocity has plunged taking the economy to newer depths.

RBI, alone wont be able to promote growth when the degrowth is happening, majorly, due to policy constrictions.

I have always considered Subba Rao as a plant by Congress/ UPA govt. Actually, the actions of RBI were perfectly in sync with the government mandates of keeping the inflation down. The only time Governor has gone against the explicit rhetoric of the government and finance minister was when he "surprisingly" din't cut the interest rates. I mock it, because if the government wanted a low inflation rate, that is exactly what it got.

Its wrong to blame RBI for the mess that we are in. Monetary policies do not create the growth, they only aid growth. If governance policies are the engines of growth, monetary policies are the steering wheels. Steering wheels cannot move or add any more momentum that is found lacking in the engines' push.

Unfortunately, for us, for RBI and for Subba Rao, we are stuck with a government which cannot look beyond few inches of its Pinnochio nose. Nose just seems to grow longer and longer with every new scams.

Subba Rao is very unlikely to be back as Governor. Good man but working for wrong set of ideologies, IMO. I, and India, just wish he had been able to stand up and whip the government for its fiscal and policy impotence much more than he has done. And he has done the country a great disservice by not being vocal enough or apocalyptic enough (just look at Mervyn King) to scare the rats out of politicians.

My only concern is... though Subba Rao was ineffective, the coming governors might be worse. I can only pray for India's sake are not stooges for the Big Congress. I hope they will have some spine to take on and correct the ineffective wayward governments.


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