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Sorry and Thank you Mr. Subba Rao

I write this with a single purpose in mind - to apologize to Subba Rao, present RBI Governor.

Though I do not 'take back' or anything I wrote but my perception of his working was clearly wrong, and has been wrong for at least past few quarters. This post in that sense is an acknowledgement of my views offline, into the same pages that I used to disparage him in past.

The long story short, I was very critical of Subba Rao's policy early on especially when I thought he was unnecessarily and unfairly keeping the rates too high. I felt, the growth coming off the 2009-2010 were and will be squandered if the rates were too high. In this, I think I am vindicated in the position however with the somewhat managed inflation (which was runaway in most months) Subba Rao too has reasons to be vindicated.

My diatribe came from the fact I could see the growth slowing across the fields I was working. With no policy actions coming from the government (on which I had given up back then!) I hoped RBI would do its bit to help out the growth. However, they didn't. RBI's policy particularly its long periods of high interest rate and occasional dips didn't help. Growth catered, and the comatose government could only manage few moves once Pranab Mukerjee was ceremonially sacked and replaced by Chidambaram.

However the later situation of the economy, domestic and global, pointed out that RBI was right in focusing on the potentially rampant inflation than go where policy-action should be doing the job. It is here that Subba Rao's policy really got me in tow.

In hindsight, Subba Rao was very consistent with the inflation goals, while doing his bit to help growth. But he had also made it clear growth cannot be achieved at the expense of inflation. And this is very true and very admirable and something they succeeded in.

It is clear that I did not read the RBI's true motives correctly or RBI read the government's incompetence correctly (whereas I still harbored some hopes of rising Manmohan Singh).

The posts I mention, were very critical of Subba Rao in the "need the growth" phase, whereas I equally began to admire his ability to be consistent despite increasing pressures from all sections - governments, businesses, growth concerns, increasing deficits - to keep the level head and think about the true common man.

Hence, I think Subba Rao did a very good job in containing inflation right throughout, though it remains the prickly point for everyone of us. The failure to contain inflation however arises solely because we did not have the growth to go along with and the blame for that squarely lies on the doors of Prime Minister.

Heres to you Mr. Subba Rao, you have been a very good governor and a worthy successor to YV Reddy. Good luck and all the best.

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