Former Governor Subbarao exposes UPA government influence on RBI autonomy

In his recent memoir titled 'Just A Mercenary?: Notes from My Life and Career', former RBI Governor Duvvuri Subbarao shed light on government's pressure on central bank to soften interest rates and present a more optimistic outlook on growth.

Subbarao recounted instances during his tenure when finance ministry, under Pranab Mukherjee and P Chidambaram, exerted influence on RBI to align its policies with government's objectives. He expressed concern over lack of understanding and sensitivity within government regarding importance of central bank autonomy.

During discussions with finance ministry, Subbarao noted instances where pressure was exerted to present higher estimates of growth and lower estimates of inflation to boost market sentiments. He recalled a specific incident involving Pranab Mukherjee, where officials contested RBI's estimates with ir own assumptions, urging central bank to project a higher growth rate and a lower inflation rate.

Subbarao highlighted his firm stance on maintaining RBI's independence and professional judgment, refusing to deviate from objective assessments to appease government demands. He stressed on importance of consistency between economic projections and policy stances, stressing that altering growth and inflation estimates would undermine central bank's credibility.

former RBI governor also detailed his interactions with Chidambaram and Mukherjee, noting ir persistent vocacy for softer monetary policies. Despite ir differing approaches, both leers consistently pushed for lower interest rates, creating tensions between government and central bank.

Subbarao's memoir provides a candid account of his career journey, reflecting on challenges and lessons learned throughout his tenure. From his early experiences as a sub-collector to his role as governor of RBI, Subbarao offers insights into complexities of policymaking and dynamics between government and financial institutions.

(With PTI inputs)