This Article is From Jan 06, 2013

Subbarao wants to make RBI a role model for central banks globally


Calling himself a "green horn" at the time of joining Reserve Bank as its Governor over four years ago, Duvvuri Subbarao has now set a goal to demystify the 'black box' image of RBI and make it a role model for central banks globally.

"For an outsider looking in, the RBI is like a black box. Everyone knows people in there do important things, but cannot figure out the connection between that and their lives.

"It is important that we demystify the RBI so that people know enough to demand accountability from us," Subbarao said in a new year message to his colleagues, while listing out his priorities for the central bank at an institutional level in 2013 and beyond.

"The quid pro quo for autonomy is accountability. We must be sensitive to the fact that we are a group of unelected technocrats handling important public policy and we should be able to explain and defend our policies and, where necessary, learn from the feedback we get," he said.

"Many of you, having been in the Reserve Bank all your careers, may not realise how important this (the role of RBI) is. But I do, because I was outside RBI for much of my career," said Subbarao who became RBI Governor in September 2008.

"I do hope that in a few years from now... everyone watching and evaluating us would say that RBI is a role model for the kind of knowledge institution that a central bank should be," he said.

Recalling the time of his joining RBI, Subbarao said he entered the central bank barely days before the global crisis erupted.

"Sure, the crisis was big; sure I was a green horn," Subbarao said.

Before joining RBI, Subbarao was Finance Secretary in the Finance Ministry, while prior to that he had been Secretary to the Prime Minister's Economic Advisory Council and lead economist in the World Bank, among other important roles.

One of the first IITians to join the civil service, 63-year old Subbarao was a topper in the All India Civil
Service examination in 1972. Subbarao was appointed RBI Governor initially for a three-year term, but his tenure was later extended by two years till September 4, 2013.

While people may consider his initial days at RBI as the "most daunting phase" of his tenure, it is the year 2012 that has been the "most challenging year" so far, Subbarao said in his new year message.

"... as uncertain as the crisis time was (in 2008), the policy directions were quite clear. Judgement was required not much on the precise content of the policy but on timing and on communication," he said.