Ready for the Swan Song ET dt.

01-05-13
Duvvuri Subbarao's term at RBI may go down as the most tumultuous since 1991. Criticised for
falling behind the curve and raised for not succumbing to intimidation! he faced both with
humour. "# catches glimses of Subbarao's $ years and % months at the helm
On policy...
October 200
This Mid-Term Review is set in the context of several complex and compelling policy
challenges. The global financial system is in a crisis of unprecedented dimensions. The problem
that originated in delinquencies in the US sub-prime mortgage maret and the associated
ballooning of the maret for complex derivatives in !ugust "##$% snowballed into a financial
sector turmoil spanning the entire financial sector.
!"ly 200#
!t the global level% the financial sector seems to be stabilising but the real sector continues to be
in a recession. &n recent months% there have been some positive signals relating to consumer
spending% credit spreads and financing conditions. 'owever% the signals are too tentative and
wea to suggest any firm turnaround.
October 200#
There has been a discernible improvement in the global economic outloo since the (irst )uarter
Review in *uly "##+. &n &ndia% too% there are definitive indications of the economy reverting to
the growth trac. !ccordingly% attention around the world% as also in &ndia% has shifted from
managing the crisis to managing the recovery.
!an"ary 2010
This time around% the policy decision was much more complex and challenging than in the last
year and a half years. ,etting out of an expansionary policy is much more difficult than getting
into it. &t is lie a -admavyuha in Mahabharata . you now how to get in but not many people
now how to get out.
Septe$ber 2010
&nflation rates have reached a plateau but are liely to remain at unacceptably high levels for
some months. /otwithstanding a slight moderation in !ugust "#0#% headline inflation remains
significantly above the trend of 1.#-1.12 in the "###s. There is% therefore% a need for continued
policy response to contain inflation and anchor inflationary expectation.
%ay 2011
3ver the long-run% high inflation is inimical to sustained growth as it harms investment by
creating uncertainty. The current elevated rates of inflation pose significant riss to the future
growth. 4ringing them down% therefore% even at the cost of some growth in the short-run% should
tae precedence.
&ece$ber 2012
'eadline inflation has been below the Reserve 4an5s pro6ected levels over the past two months.
The decline in core inflation has also been very comforting. These emerging patterns reinforce
the lielihood of steady moderation in inflation going into "#07-08% though inflation may edge
higher over the next two months.
%arch 2013
9levated food prices ... and the wedge between wholesale and retail inflation have adverse
implications for inflation expectations. Riss on account of the current account deficit remain
significant notwithstanding liely improvement in the fourth quarter. 9ven as the policy stance
emphasises addressing the growth riss% the headroom for further monetary easing remains quite
limited.
On inflation dyna$ic'
& used to pay Rs"1 for a haircut "# years ago. /ow% when & have virtually no hair left% & pay
Rs.01# for a haircut. & struggle to determine how much of that is inflation
On fi'cal road$ap
'aving been in the govt. & want to say that & also acnowledge its challenges. So% what
everybody is looing for is a little more detail on how this fiscal roadmap will be implemented
On bla'ting lobbyi't'
:e got to mae it wor and it5s a shared responsibility of the government% of the R4& and of the
economic sector managers. & don5t thin this blamegame can go on
On refor$'
-eople tal about two ways of doing reforms. The ;aclav 'avel model which says that <you
cannot cross a chasm in two leaps<. There is a =eng model saying you <cross the river by feeling
the stones<. :e believe that we must cross the river by feeling the stones
("ll' ) (re''"re'
:ell% & am maing the statement so that everybody in &ndia acnowledges the steps which we are
taing. !nd also >everybody? acnowledges the government is determined to bring about fiscal
consolidation. !nd% & sincerely hope that everybody will read the statement and tae note of that
- & Chidambaram% (inance Minister
The space for monetary authorities has been created both by the budget and by the way inflation
has behaved- C Rangara'an% @hairman% -rime Minister5s 9conomic !dvisory @ouncil
:e are looing at it with unhappiness. :e feel the signal should have been stronger. Many
people would say that the signal should have been more robust than "1 basis points- (onte)
Singh *hluwalia% =eputy @hairman% -lanning @ommission
:as hoping that the R4& would go ahead with a 1#-bps reduction in the repo rate to mae a
significant impact on investor sentiments- *di +odre'% -resident% @&&