WHY SO MUCH HYPE AND HOOPLA OVER RBI GOVERNOR ROLE?
By Ruma Dubey
Do you ever remember watching, reading or hearing so much about the appointment of a new RBI Governor? Or for that matter, about how the entire nation was disappointed that Rajan’s tenure will not be extended post September’16.
Times have indeed changed. And this change is for the good. Maybe we are aping the western world but this is a “good” ape!
Till a few years ago, the appointment or retirement of a RBI Governor was small news, mentioned in a small column on the first page of the newspapers. Later it was announced in the news when Doordarshan came into being. But so much fanfare, so much analysis, making it “breaking news” this is something which has happened over the past couple of years only.
Actually it was during Dr.Subbarao’s tenure, the predecessor of Rajan who got the chair of RBI Governor so much prominence. In fact it was ruing his time that we learnt the significance of the role of the RBI Governor. The crisis of 2008 put the Governor right in the center of every eye in the country. If earlier, people perceived the RBI Governor as merely the person who signs your rupee notes, his role in controlling inflation and leading us through the crisis made one sit up and take notice. The significance of the Governor has grown so much that today we all look upon the Governor as the person who can save the economy whilst it is actually the role of the Govt.
It was also during Subbarao’s tenure that we learnt, probably for the first time, that RBI Governor and Finance Ministry are two independent authorities. With the Governor holding his steed, not cowing down to pressures from the people and Govt to announce more “populist” moves, the position truly earned a distinction of its own. The market too started expecting the governor to bolster the economy and growth in the face of complete inaction from the govt. When the Governor refused to budge, it actually made us all delve into the actual objectives of RBI – where does RBI’s work end and where does that of the Govt begin. It is during this time that we learnt that RBI’s objective it to issue bank notes, formulate, implement and monitor monetary policy, maintain price stability and ensure adequate liquidity in system. The rest was the job of the Govt!
Actually, the significance of RBI Governor shot into prominence thanks also to his counterpart in USA – Ben Bernanke of Federal Reserve. When the US plunged into crisis, it was Bernanke, the colloquial knight in the shining armour, who helped put together the crumbling pieces together. Thus we all suddenly started seeing the RBI Governor in a new, much elevated and bright light.
Credit policies, from being a routine policy statement, are now anticipated with expectations like the Union Budget. There is a countdown on some channels to the credit policy!
This is an extremely positive change where the role of the RBI Governor has come so much into the limelight. In the coming next few days, we will know the name of the new RBI Governor and as usual, expectations are high.
Take a look at the list of previous RBI Governors, scroll down to the deputy governors and see how many of them actually became Governor -http://rbi.org.in/scripts/AboutUsDisplay.aspx?pg=PastGovernors.htm