Former RBI governor reveals truths about Modi, Manmohan, demonetisation and more
At a time when the autonomy of the Reserve Bank of India (RBI) is a raging debate, especially post-demonetisation, here comes a book by former RBI governor YV Reddy, Advice and Dissent, recounting a fascinating anecdote wherein, when asked about the institution’s autonomy, he told a journalist: “The RBI has full autonomy. I have the permission of my finance minister to tell you that.”
Remind Reddy about this incident and he says that the autonomy issue has been unnecessarily raised now and that it had been settled back. “Jawaharlal Nehru had said that the RBI was independent — not from the government but within the system of the government,” he says, adding that today a lot more coordination is required between different agencies of the government and the RBI.
Advice and Dissent is an insider’s saga on how the government and the RBI work. But throughout, to his credit, the author has resisted the temptation of sensationalising things. His subdued approach is evident when he narrates the RBI’s crackdown on the Sahara group, despite the fact that Reddy believed his life was under threat because of this very case.
“I was assured that there was no basis for such fears,” he recalls. His matter-of-factly approach can also be seen vis-à-vis his bittersweet relations with then finance minister P Chidambaram. So much so that Reddy, who was RBI governor between 2003 and 2008, had thought of quitting his job twice, but stayed on after the intervention of then PM Manmohan Singh.
“His (Chidambaram’s) image as a reformer pushing for double-digit growth was, in his view, being dented by my caution to the extent of resisting implementation of some of his policies,” Reddy writes in Advice and Dissent, adding that Chidambaram even had to cancel a foreign visit as he could not face investors due to his "poor" reform record.
But a decade down the line, Reddy downplays the rift. “Don’t take my resignations too seriously. Actually, in four years, I thought of resigning only twice,” says he with a smile. “Our relationship, despite such ups and downs, was based on mutual respect; it was not antagonistic, as some of us would like to believe.”
The high point of the book, however, is when Reddy talks about his association with NT Rama Rao, calling him an honest and innovative politician. “NTR was a charismatic man who was always in search of new ideas. But what made him stand out was his penchant for taking tough decisions.”
One gets the most incisive analysis on NTR’s personality, in Advice and Dissent, when Reddy reveals how the then Andhra Pradesh CM looked at intellectuals. “Whenever he found an intellectual whom he fancied, NTR liked to court him, but once the intellectual settled down in the harem, he would lose interest and pursue other intellectuals,” Reddy writes.
Reddy also reveals how NTR, despite his larger-than-life persona, hankered after applause on trivial issues. He would ask the author to vindicate if he was indeed a great man and that his handwriting resembled a “string of pearls”! Manmohan Singh, too, gets a glowing review in the book. Reddy rates him highly as an economist, saying his role in India’s liberalisation in 1991 remains unparalleled.
“He had the advantage of being always in India, unlike many other economists. He has been a witness to successes and setbacks.”
When asked about his not-so-successful stint as PM in UPA-II, Reddy gives a one-line reply: “Whenever he had full freedom to take decisions, he did well.”
The former RBI chief answers as much as he doesn’t! But on the role of Narasimha Rao, his reply isn’t ambiguous. “There should be no confusion that Rao was the main force behind the 1991 saga. Everyone knew by the mid-1980s that the socialist system wasn’t working. The same technocrats and bureaucrats were there, so how could they take credit. What made the difference was the presence of Rao in that critical juncture.”
Reddy also praises PM Narendra Modi, despite being critical of his demonetisation move. “Modi has taken a few bold steps — like GST and the one on benami properties — which the political class has been avoiding for decades. Even his note ban move vindicates his decisiveness, though I am critical of the RBI being armtwisted for curbing black money — if that was the objective of demonetisation — as it should instead have been done by the income tax department.”
The RBI may not be autonomous from the government, but as Nehru said, it definitely needs autonomy “within the system of the government".
(Courtesy of Mail Today.)
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