Expressing surprise at RBI Governor Raghuram Rajan’s decision to leave RBI and not seek an extension, former governor D Subbarao on Monday said Rajan’s continuance would have “immensely benefited” macroeconomic management of the country.
“I can say I was surprised by Governor Rajan’s decision to not be considered for the appointment (extension of his term). I think he had done a great job, and that our macroeconomic management would have benefited immensely if he had continued,” Subbarao told CNBC TV18.
Asked who is best placed for the post of RBI Governor, Subbarao said, “Even a person without economics background, if he has got sufficient intelligence and leadership qualities... can lead RBI. So, this belief that the Governor must be an economist, we should not carry it to far.”
Citing example of the International Monetary Fund (IMF) MD Christine Lagarde, Subbarao said Lagarde is not an economist, but is doing “a great job”. “So, to believe that an IAS officer would make a better Governor or an academician would make a better Governor, I think it depends on the individual,” he explained.
Rajan, who will have the shortest tenure as RBI Governor since liberalisation began in 1991, decided not to seek a second term after unbridled political attacks on him led by BJP MP Subramanian Swamy.
Recalling his earlier days at RBI, Subbarao, who manned the Mint Road during the global financial crisis and had a 5-year tenure from 5 September 2008 to 4 September 2013, said the rupee tantrum was a bigger challenge for him than the Lehman Brothers crisis.
“The issue of managing expectation about the exchange rate is much more challenging,” he noted.
Talking about his relationship with then prime minister Manmohan Singh, Subbarao said “as far as I was concerned, the then prime minister was very positive about my leadership at RBI”.
“And all the friction which I had with the Finance Ministry, he (Manmohan Singh) was a gentle arbitrator,” the former RBI governor said.
On the proposed new monetary policy committee (MPC) that will move interest rate setting powers from RBI Governor to a broader panel, Subbarao felt that “MPC is the way we should be going”. “I had said in a lecture that we should have MPC,” he noted.
Subbarao added that the professional competence of RBI is best in the world.