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RBI: A Hard Look at Autonomy and Accountability
It is useful that the memoir of former Reserve Bank of India’s (RBI) governor, Dr Duvvuri Subbarao, was released in the middle of impassioned debate about a second term for Dr Raghuram Rajan. Thanks to Dr Rajan’s rockstar-like status, the chatterati and the socialite has as many views about RBI, its autonomy and the appointment and independence of its governors, as economists, policy-makers and commentators. Dr Subbarao’s book Who Moved My Interest Rate is, however, a better way to carry this debate forward.
 
The bulk of Dr Subbarao’s book is about RBI’s role as the monetary authority of managing inflation and interest rates to ensure adequate supply of credit to enterprises at the right price. This is unsurprising. RBI, as an organisation, is so focused on these issues that a posting in the monetary policy department is considered vital to an eventual promotion as executive director or deputy governor. This column is going to focus on the other roles and responsibilities of RBI, some of which Dr Subbarao skims over. We do this in the context of his own assertion that RBI and its governor ought to be a lot more accountable to the public and to the parliament than the current practice of the standing committee of parliament “summoning the governor on specific issues” three or four times a year.  
 
Dr Subbarao is emphatic that such “sporadic and voluntary mechanisms for accountability are inadequate” for a “public policy institution (he omits regulator and supervisor) with such a powerful mandate.”  He says that RBI’s accountability must extend beyond the February 2015 agreement with government to target inflation and must include a statutory, US-style mechanism, where the governor appears before the standing committee at least twice a year and responds to questions on polices and their outcomes. Let us look at how RBI would have fared had Dr Subbarao been questioned by knowledgeable parliamentarians in a televised testimony (let’s copy the US system all the way) on several issues that are barely discussed in his book. Consider: 
 
RBI’s Role as Regulator and Supervisor of the Financial System: RBI has always enjoyed a Teflon-coated existence when it comes to its role as a supervisor, despite many scams over the decades. It always comes in to investigate and penalise and is never held accountable for missing the problem. Non-performing loans of banks, now estimated at a massive Rs8 lakh crore ballooned after the 2008 crisis when the central bank asked banks to give industry a breather. Banks as well as RBI should have ensured that this leeway wasn’t misused by large borrowers for repeated restructuring of loans or to default on their payment obligations. This did not happen. Dr Raghuram Rajan has now raised this issue at an RBI conference 27th July saying, “As with inflation, it was the duty of the central bank to press for bank clean-up earlier, when few among the public support the central bank’s activism.” Indeed, RBI got serious about this well after bank unions finally went public, in November 2013, with slogans such as ‘stop the loot of public money,’ ‘kick out bad loans before they kill the banks’. 
Burgeoning bad loans were surely a big issue when 
 
Dr Subbarao completed his term in September 2013; but the book makes no mention of it. Instead, he devotes several pages to the “blow up in the microfinance sector” under his watch, led by his home state of Andhra Pradesh. Here, too, his observations are limited to his actions to manage the crisis, without addressing why RBI, as a regulator, failed to notice the usurious loans and entrapment of borrowers through multiple loans even though a spate of loan-related suicides were widely reported by the media, long before the crisis blew up. 
 
Similarly, there is an elaborate segment on the Saradha scam which was a collective investment scheme rather than a chit fund. Regulation of these schemes is under the Securities & Exchange Board of India (SEBI), but the Saradha scam figures in the book because of what he said in a deposition before the standing committee. “I admitted to the committee that our balkanized regulatory structure in the non-banking financial space, straddling so many different regulators and regulations, was bewilderingly complex and confusing with regulatory overlaps and cracks,” he writes. Dr Subbarao dubs this a policing failure rather than a regulatory failure and claims that these collective investment schemes operate below the regulatory radar. At the risk of using rather strong words, this is certainly not true.  Companies such as Saradha, Sahara, Rose Valley and Pearls flaunted their endless wealth and powerful political connections in the face of the public, the media and the regulators. RBI wasn’t looking, while SEBI struggled because they successfully gamed the judiciary to avoid action. 
 
A high level coordination committee on financial market (HLCCFM) regulators, presided over by the RBI governor, existed to deal with such cracks and regulatory overlaps. But Dr Subbarao clearly failed to provide appropriate leadership in this role. This is also evident in another episode with serious consequences. Dr Subbarao writes that a turf battle between SEBI and IRDAI (Insurance Regulatory and Development Authority of India) on regulating ULIPs (unit-linked insurance products) almost led to a statutory mechanism to handle disputes between regulators. Why did the HLCCFM did not address and defuse this issue before it blew out of proportion? We don’t know.
 
RBI’s Role in Managing India’s Forex Reserves and Currency Management: Dr Subbarao has a short chapter on the subject which is mainly an interesting episode about RBI’s highly secret operation to purchase of 200 tonnes of gold from the IMF in 2009. The Bank was praised for a ‘hedge fund like operation’. On the larger issue of forex management and how it is conducted, Dr Subbarao insists that RBI’s disclosures of sensitive forex data is in line with international best practices. But many high-level insiders admit that there is very little accountability in these operations or assessment of the cost of RBI’s actions and decisions to stabilise currency which is ultimately borne by the exchequer. 
 
Role of the Directors: Good governance norms require that RBI’s board of directors, especially the outside directors (who are presumably independent directors) to ask detailed questions. This does not happen. The criteria for selecting these directors is also a mystery. RBI itself has resisted putting out any details about its board meetings, despite an order of the Central Information Commission to disclose at least the board minutes and notes.  
 
The Ivory Tower: Dr Subbarao attributes a very interesting observation to prime minister Manmohan Singh (p 237) who asked him to keep his ears to the ground. He writes, “At the same time, here was also much truth to what the Prime Minister had told me. The Reserve Bank is an insular institution with not much public interface.” This accurate insight led to an outreach programme where top management held town hall meetings and visited villages. But  this insular attitude is exactly why RBI has been caught napping on so many scams or cannot come up with a user-friendly know your customer (KYC) rule.
 
Ignoring the Consumers: To me, a significant omission in the book is the absence of any mention of the middle-class consumer, who is preyed upon by banks to liquidate safe fixed deposits for expensive ULIPs, mutual funds, gold coins, hybrid derivative instruments or enter into ‘wealth management’ schemes that decimate their savings. The only interaction with these consumers was through Dr KC Chakrabarty, who he had stripped off most portfolios (barring four) for five long months as a punishment for his outspoken views on interest rate management. Ironically, the customer services department did fairly well under his watch. It was then that RBI began to draft a comprehensive consumer charter, which Dr Subbarao’s successor announced but has failed to implement in his entire three-year tenure. 
 
Dr Chakrabarty tells us that, despite that sordid episode, Dr Subbarao was not only impeccable in his inter-personal dealings with him, but also backed him strongly on all the major pro-consumer actions. The omission, however, means that we will have two successive governors—Dr Subbarao and Dr Rajan—who have all but ignored the issues of growing middle-class consumers. 

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COMMENTS

B. Yerram Raju

9 months ago

There are a few other omissions - Financial Cooperatives, failure in agricultural and MSME sectors, failure of NABARD in taking financial cooperatives forward, data integrity in banking statistics that often led to wrong perceptions in policies. And these continue today. But an author cannot treat all the issues in one go and in one book and no book did it!! May be another book is under script!!

SuchindranathAiyerS

10 months ago

India's Central Bank is not really a Central Bank. It is a Neta-Babu sinecure. It has been since inception when it was carved out of the Imperial Bank of India in 1935 on the basis of the Hilton Young Currency Commission and the Radcliffe Committee Report. It is merely an instrument of State Policy with no autonomy whatsoever. The old Imperial Bank of India (amalgamated from the Bank of Bengal 1806, Bank of Bombay 1840 and Bank of Madras 1843 in 1921) and its successor, the State Bank of India (1955) had far greater autonomy than the RBI until Indira Gandhi amended the State Bank of India to sack Chairman R. K. Talwar in 1976 (her fascist rule during "emergency") for not enthusiastically aiding and abetting her plunder of the financial system for her minions, cronies, party and cohorts. (Sanjay Gandhi and Janardhan Poojari spear headed the heist).


The proof is in the pudding. It has always been run by Babus like Manmohan Singh (IAS) and H.V.R.Iyengar (ICS) who have been trained and groomed to brown nose the ruling clique for their personal pelf, pleasure, pomp and suitable "pay commissions". If the RBI had been a real Centrl Bank, India would neither have the sort of run away inflation due to Government profligacy and corruption over the last sixty years, nor the scale of Bad Loans ("Non Performing" or "Stressed" Assets - ASSETS?)

A.Chandramouliswaran

10 months ago

A.Chandramouliswaran.

I have not yet read the book of Dr. Subba Rao. I thought I should at least read your write up on the book before I offer my comments. I must at the outset confess that as I had retired almost 15 years ago from RBI and with changes having taken place during this period, my critical observations may not be entirely valid. However, on the basis of the general trend in the country, even if things have changed, they might have changed only for the worse! You have been quite critical of Dr. Subbarao in so far as the performance of his role in the exercise of the RBI's power of regulation and supervision of banks and customer service for middle class. In the exercise of its regulatory and supervision function over banks, NBFCs etc., RBI has not been effective since it does not have the required freedom and autonomy. Successive Finance Ministers have only misled the public by proclaiming that the RBI is an autonomous Institution. It is not so except when some of the Governors were able not to pay heed to the Government in the matter of interest rate. The interference of Government in regard to matters relating to regulation and supervision of banks prevents the effective functioning by the RBI. One can argue that the Bank is also responsible for allowing its autonomy and independence to be eroded and that perhaps it was only too willing to assume a role subordinate to that of the Government. One wonders whether any Governor would be allowed to be independent. You have seen the plight of Dr.Rajan. It would, therefore, be fair to point out the failings of the RBI in these areas only when it enjoys autonomy in law and the Governor is appointed for a period of 5 years (if not six years) and given the constitutional protection granted to CEC, C&AG, judges of the Supreme court. In the matter of NPAs of banks, the following measures may help:
1. Public sector banks have to fix accountability at various levels for the follow up and timely measures for recovery of loans. Officials who are found to have failed to act promptly would have to be punished after following the procedures for disciplinary action.
2. RBI would have to be tough in acting on their inspection findings and ensuring corrective action promptly.
3. The talk of exempting Public sector bank officials from the scrutiny of CVC, CBI etc. should be given up since there has been a lot of corruption in the grant of loans and gross negligence in ensuring compliance with the conditions subject to which the loans were granted before the loan is disbursed.
3. RBI would have to be extraordinarily tough in punishing officials of banks for violation of its rules/regulations. RBI has been too soft and the banks are not at all scared of the RBI. Banks that have been guilty of non-compliance with KYC norms etc. have been allowed to escape after paying a paltry amount by way of fine. Officials have to be dismissed from service for wrong doings and the fear of the RBI (if not of God!) has to be created amongst the bankers.
Bank Unions have been praised for bringing out the extent of NPAs much before the RBI had acted. Union representatives have been inducted on the boards of public sector banks almost 15 years ago and they have not been able to make any useful contribution either at the stage of sanction of loans or at subsequent stages. They should have expressed their misgivings in the Board meetings and insisted on their views being recorded in the minutes of the Board meetings whenever they have opposed action decided in the Board. Unfortunately, they have not acted with any independence while functioning on the Board. I am not hazarding any guess of the reasons for their not doing it.

As regards the Central Board of the RBI is concerned, one does not know as to what useful function is being performed by it. Independent members in the Board function in the manner in which Independent Directors generally function in the banks, companies etc.! Thus, the Central Board merely fulfills the statutory requirement!











































I have not yet read the book .A.Chandramouliswaran.

I have not yet read the book of Dr. Subba Rao. I thought I should at least read your write up on the book before I offer my comments. I must at the outset confess that as I had retired almost 15 years ago from RBI and with changes having taken place during this period, my critical observations may not be entirely valid. However, on the basis of the general trend in the country, even if things have changed, they might have changed only for the worse! You have been quite critical of Dr. Subbarao in so far as the performance of his role in the exercise of the RBI's power of regulation and supervision of banks and customer service for middle class. In the exercise of its regulatory and supervision function over banks, NBFCs etc., RBI has not been effective since it does not have the required freedom and autonomy. Successive Finance Ministers have only misled the public by proclaiming that the RBI is an autonomous Institution. It is not so except when some of the Governors were able not to pay heed to the Government in the matter of interest rate. The interference of Government in regard to matters relating to regulation and supervision of banks prevents the effective functioning by the RBI. One can argue that the Bank is also responsible for allowing its autonomy and independence to be eroded and that perhaps it was only too willing to assume a role subordinate to that of the Government. One wonders whether any Governor would be allowed to be independent. You have seen the plight of Dr.Rajan. It would, therefore, be fair to point out the failings of the RBI in these areas only when it enjoys autonomy in law and the Governor is appointed for a period of 5 years (if not six years) and given the constitutional protection granted to CEC, C&AG, judges of the Supreme court. In the matter of NPAs of banks, the following measures may help:
1. Public sector banks have to fix accountability at various levels for the follow up and timely measures for recovery of loans. Officials who are found to have failed to act promptly would have to be punished after following the procedures for disciplinary action.
2. RBI would have to be tough in acting on their inspection findings and ensuring corrective action promptly.
3. The talk of exempting Public sector bank officials from the scrutiny of CVC, CBI etc. should be given up since there has been a lot of corruption in the grant of loans and gross negligence in ensuring compliance with the conditions subject to which the loans were granted before the loan is disbursed.
3. RBI would have to be extraordinarily tough in punishing officials of banks for violation of its rules/regulations. RBI has been too soft and the banks are not at all scared of the RBI. Banks that have been guilty of non-compliance with KYC norms etc. have been allowed to escape after paying a paltry amount by way of fine. Officials have to be dismissed from service for wrong doings and the fear of the RBI (if not of God!) has to be created amongst the bankers.
Bank Unions have been praised for bringing out the extent of NPAs much before the RBI had acted. Union representatives have been inducted on the boards of public sector banks almost 15 years ago and they have not been able to make any useful contribution either at the stage of sanction of loans or at subsequent stages. They should have expressed their misgivings in the Board meetings and insisted on their views being recorded in the minutes of the Board meetings whenever they have opposed action decided in the Board. Unfortunately, they have not acted with any independence while functioning on the Board. I am not hazarding any guess of the reasons for their not doing it.

As regards the Central Board of the RBI is concerned, one does not know as to what useful function is being performed by it. Independent members in the Board function in the manner in which Independent Directors generally function in the banks, companies etc.! Thus, the Central Board merely fulfills the statutory requirement!











































A.Chandramouliswaran.

I have not yet read the book of Dr. Subba Rao. I thought I should at least read your write up on the book before I offer my comments. I must at the outset confess that as I had retired almost 15 years ago from RBI and with changes having taken place during this period, my critical observations may not be entirely valid. However, on the basis of the general trend in the country, even if things have changed, they might have changed only for the worse! You have been quite critical of Dr. Subbarao in so far as the performance of his role in the exercise of the RBI's power of regulation and supervision of banks and customer service for middle class. In the exercise of its regulatory and supervision function over banks, NBFCs etc., RBI has not been effective since it does not have the required freedom and autonomy. Successive Finance Ministers have only misled the public by proclaiming that the RBI is an autonomous Institution. It is not so except when some of the Governors were able not to pay heed to the Government in the matter of interest rate. The interference of Government in regard to matters relating to regulation and supervision of banks prevents the effective functioning by the RBI. One can argue that the Bank is also responsible for allowing its autonomy and independence to be eroded and that perhaps it was only too willing to assume a role subordinate to that of the Government. One wonders whether any Governor would be allowed to be independent. You have seen the plight of Dr.Rajan. It would, therefore, be fair to point out the failings of the RBI in these areas only when it enjoys autonomy in law and the Governor is appointed for a period of 5 years (if not six years) and given the constitutional protection granted to CEC, C&AG, judges of the Supreme court. In the matter of NPAs of banks, the following measures may help:
1. Public sector banks have to fix accountability at various levels for the follow up and timely measures for recovery of loans. Officials who are found to have failed to act promptly would have to be punished after following the procedures for disciplinary action.
2. RBI would have to be tough in acting on their inspection findings and ensuring corrective action promptly.
3. The talk of exempting Public sector bank officials from the scrutiny of CVC, CBI etc. should be given up since there has been a lot of corruption in the grant of loans and gross negligence in ensuring compliance with the conditions subject to which the loans were granted before the loan is disbursed.
3. RBI would have to be extraordinarily tough in punishing officials of banks for violation of its rules/regulations. RBI has been too soft and the banks are not at all scared of the RBI. Banks that have been guilty of non-compliance with KYC norms etc. have been allowed to escape after paying a paltry amount by way of fine. Officials have to be dismissed from service for wrong doings and the fear of the RBI (if not of God!) has to be created amongst the bankers.
Bank Unions have been praised for bringing out the extent of NPAs much before the RBI had acted. Union representatives have been inducted on the boards of public sector banks almost 15 years ago and they have not been able to make any useful contribution either at the stage of sanction of loans or at subsequent stages. They should have expressed their misgivings in the Board meetings and insisted on their views being recorded in the minutes of the Board meetings whenever they have opposed action decided in the Board. Unfortunately, they have not acted with any independence while functioning on the Board. I am not hazarding any guess of the reasons for their not doing it.

As regards the Central Board of the RBI is concerned, one does not know as to what useful function is being performed by it. Independent members in the Board function in the manner in which Independent Directors generally function in the banks, companies etc.! Thus, the Central Board merely fulfills the statutory requirement!












































Ramesh B Mhadlekar

10 months ago

RBI should be audited by CAG a move in the interest of the country and let the country know how the so called assumed and presumed honest executives loot the nation or do not follow their own rules and manuals for their pecuniary gains .I am sure many will go behind the bar if cases are registered against them under sec 13(1) (d) of the Prevention of corruption act 1988 for misusing their position to loot the nation.

A.Chandramouliswaran

10 months ago

It has been said that Bank Unions had brought out the serious issue of NPAs before the RBI flagged the issue. It has been almost twenty years since Unions have been given representation on the Bank's Boards. One wonders as to what was the contribution of these representatives in minimising the NPAs through their monitoring while being on he Board. In my experience and when I was on a bank's board, their contribution in the deliberations in the Board on this subject was unfortunately nothing. They had not pointed out the deficiencies in the roles performed by senior functionaries.
I would also like to say that the Banking Division( originally known and now Financial Services sector) in the Ministry of Finance should be drastically downsized and they should leave all matters relating to banks to the RBI and the Ministry should write to the RBI and not deal with banks directly.

Abhijit Gosavi

10 months ago

One conclusion that I'm drawing from this is that many of these so-called committees do very little and are formed too late. Also, could it be that the leaders at the top are just going through the motions?

Abhijit Gosavi

10 months ago

One conclusion that I'm drawing from this is that many of these so-called committees do very little and are formed too late. Also, could it be that the leaders at the top are just going through the motions?

Gopalakrishnan T V

10 months ago

I have not read the book but I have seen the news reports, comments and reactions from many a veterans on the contents of the book. My understanding of the book based on the discussions is that the book is nothing but a reaction of the former Governor to the treatments meted out to him by the Finance Ministers of the UPA government ignoring the importance of the Central Bank as an autonomous body and allowing it to function the way the Central bank desires in the interests of the economy and the masses. The interference of the Government at each and every aspect of RBI's function naturally irritates any independently thinking Governor and there was literally no understanding or coordination between the Government and the RBI during Dr Subbarao's period. The failure of the UPA government on the economic front was expected to be made good by the RBI with its limited tools on monetary front and control on the banks. The Central Government expected RBI Governor to act as per its expectations and directions but unfortunately Governor, Subbarao having got independent charge of a sensitive institution and having understood its role more as a responsible institution to safeguard the economy from the ruins of the Government actions, failures and the adverse dynamics of the international markets , had to have different stance which was well appreciated and recognised by all . No doubt RBI had failed on certain fronts particularly in the area of regulation and supervision of banks but again the Government is responsible as it had interfered in this area also without allowing RBI to have its say. The Government appointed two of its nominees on the RBI Board, set up Financial Stability Development Council with the Finance Finance Minister as its Chairman taking away the importance of RBI as the sole authority of the Financial System , issued directives to commercial banks to act the way the Government wants ignoring the role of RBI as the sole authority to regulate and supervise banks, The Government did not allow one of the efficient Deputy Governors to continue in service as it had some vested interests . Dr Subbarao's memoir is not a reflection of the duties and responsibilities of RBI in toto but it is only a part of the commentary the Governor had experienced in his tenure and it only reflects perhaps some of the handicaps RBI face in the discharge of its vital functions. No doubt, the middle class is totally let down and the Customer Service is at its lowest ebb but who is responsible for this is an issue which needs to be debated separately. Several Committees have dealt with this topic but the fact remains that the service is deteriorating day by day is the reality and it is reflecting on the financial savings of the community . The bad debts problem is also a creation of the Government and the banks and RBI has perhaps failed in not exposing this issue and not being transparent as to what is going wrong?

REPLY

Sucheta Dalal

In Reply to Gopalakrishnan T V 10 months ago

As a former central banker, I do think you should read the book. The media has emphasised on only one aspect. So has the governor. That is precisely the problem. If an RBI governor has no time or interest in banking supervision and consumer issues, these must be put under a separate regulator. Don't you think it is strange that there is an entire chapter on lobbying for the extensions of favourite deputy governors (only four) and on the beautiful RBI bungalow and how they allowed lesser mortals to enjoy its hospitality and NOTHING on core issues that concern the largest stakeholders-- consumers?

Ramesh B Mhadlekar

In Reply to Sucheta Dalal 10 months ago

I fully agree with you. They have enough of time for get together with families on cruise. The said Governor wants to shift the failure on the Government. Why are they afraid of providing the information of the Board of Directors? why do they defy the CIC? The ivory tower will crash if all the information of mismanagement and loot are provided by them under the RTI, which they have always denied under the guise of sec 7 (9).The corrupt guys are always in though process of how to loot the RBI and hence have no time or lack concentration to act as regulatory authority. A recent RTI has exposed as to how one of the DG is flouting the GAD manual of RBIU by allowing his wife to use bank cars for her travelling to work place and other spouse of ED claiming petrol allowances from RBI and using Bank's car for her travel to work place contrary to the guidelines of GAD manual of RBI.

Ramesh B Mhadlekar

In Reply to Sucheta Dalal 10 months ago

I fully agree with you. They have enough of time for get together with families on cruise. The said Governor wants to shift the failure on the Government. Why are they afraid of providing the information of the Board of Directors? why do they defy the CIC? The ivory tower will crash if all the information of mismanagement and loot are provided by them under the RTI, which they have always denied under the guise of sec 7 (9).The corrupt guys are always in though process of how to loot the RBI and hence have no time or lack concentration to act as regulatory authority. A recent RTI has exposed as to how one of the DG is flouting the GAD manual of RBIU by allowing his wife to use bank cars for her travelling to work place and other spouse of ED claiming petrol allowances from RBI and using Bank's car for her travel to work place contrary to the guidelines of GAD manual of RBI.

pvmaiya

10 months ago

I have not yet read the book- I am away abroad now for a month. From what has appeared in news papers, television debates and interview given by Dr. Subba Rao, I agree with your review that in several areas RBI was deficient in the discharge of its responsibility. In the area of escalating NPAs, RBI which had a director on the Boards of each PSB, it cannot escape responsibility. Much of the infrastructural finance could have been better monitored, Central and State Govts could have been sternly advised to observe discipline in the use of finance, CMDs could have been warned about growth in balance sheet size without commensurate profitability ,etc. Individual Boards with majority



of directors being from political association were unfit to guide the banks, independent directors became helpless often.

Ganesh Iyer

10 months ago

It was on this Governor's name currencies were printed by great error after his tenure was over thereby causing a loss of Rs 34 crores public money. Who is responsible for this ? Can RBI make loss by such negligence ? Does it mean it is evidence the quality if staff in RBI are not competent in deliverance.

REPLY

Ramesh B Mhadlekar

In Reply to Ganesh Iyer 10 months ago

I fully agree with you the amount should be recovered from the negligent officials who cannot take the country to ransom by their negligence.

MG Warrier

In Reply to Ganesh Iyer 10 months ago

Was it the cost of printing or assumed value of wrongly printed paper destroyed by the printing press? Sometimes when we quote from memory, we confuse the readers.

Ganesh Iyer

In Reply to MG Warrier 10 months ago

It was the cost of printing and the raw material which had to be destroyed as the currency contained the name of former governor. Please check this news fromweb site if possible.

MG Warrier

In Reply to Ganesh Iyer 10 months ago

OK...Anyway, it has no direct connection with the book or the review. Except that the name of the Governor was got wrongly printed as 'D Subbarao' when Raghuram rajan had already taken charge and the error was got rectified by destruction of the printed papers.

MG Warrier

10 months ago

We can go with Chidambaram’s assessment of the book. He said: “A learned, meticulous and honest account of Dr Subbarao’s five years at the helm of RBI. His intellectual integrity shines on every page of the book”. Though there are volumes and volumes covering the working and evolution of RBI, in this book, in less than 350 pages, the author gives a bird’s eye view of the role of RBI in the economic development of India and more importantly, makes the reader understand that every move by RBI affects citizens in one way or the other. The author has successfully explained delicate policy concepts handled by RBI without using ‘jargon and charts’. A word about this review by Sucheta Dalal. Perhaps this is the first one appearing in the media by someone who has gone through the book!

REPLY

Sucheta Dalal

In Reply to MG Warrier 10 months ago

Didnt some paper report that Mr Chidambaram gave the quote for the book jacket without reading the book? Hard to believe this is his view after reading it. Mr Chidambaram is combative even about the smallest things -- but the blurb has silenced him on this issue

MG Warrier

In Reply to Sucheta Dalal 10 months ago

If there is a 'Guinness Book Record" for a book that is reviewed/commented upon by maximum number of people before reading the book, this book may get it. Many openly say they have not read it and write long articles on the book and the reserve bank of India and its relationship with GOI (One IIM Professor included!)

Monsoon: Predicting an unpredictable climate system
As news both good and bad pours from across India, the monsoon is once again in the limelight. From farmers, scientists and economists to astrologers, the monsoon has a significance unlike any other climate phenomenon in India.
 
The monsoon provides around 80 per cent of the total rainfall in India. Getting monsoon predictions right occupies much attention of the weather department in India so that governments can make adjustments to their policies and prepare for droughts or floods according to the likely rainfall pattern.
 
However, the Asian monsoon, unlike its counterparts in West Africa and Australia, has been characterised by remarkable unpredictability and seasonal changes in wind direction and quantity and location of rain. Climate change due to global warming has added yet another dimension of unreliability to the monsoon. Understanding the timing, duration and intensity of the monsoon is vital if predictions of drought and flood are to be made.
 
Any marginal change, say a 5 to 10 per cent, in the total rainfall may appear to be small but these apparently small variations in the Indian monsoon can influence agricultural production and the stocks and commodities market in a big way. The variability of rainfall on shorter time scales has the biggest impacts.
 
For instance, intense heavy rainfall leads to flooding while the breaks in monsoon for over a week or more lead to water shortage and agricultural drought. Evenly distributed rainfall over the four monsoon months could be referred to as the best monsoon. 
 
The variations in seasonal rainfall are often related to weather in other parts of the world, such as El Niño events in the Pacific Ocean. Simulations of future climate generally suggest an increase in monsoon rainfall on a seasonal mean, area-average basis.
 
This is due to the twin drivers of an increasing land-sea thermal contrast, but more importantly due to warming over the Indian Ocean which allows more moisture to be carried to India. Typically, increases in the total rainfall over India may be in the range of 5-10 per cent, although some climate models suggest more and some less.
 
The current climate models suggest greater variability in monsoon rainfall from year to year in a warmer world. In the future, it is expected that there will be extreme weather events with excessive rainfall in some years with low to very low rainfall in other years.
 
Most importantly, the regions that earlier experienced sufficient rainfall could face droughts while those that experienced lower rainfall could face floods frequently. The Indian summer climate in the coming century looks to be wetter on average, together with flood and drought conditions occurring more often.
 
It is important to build better capability to simulate the day-to-day and intra-seasonal variability of monsoon in climate models with more confidence in projections. In the future, increasing population along with various developmental priorities will bring additional stresses on society and the environment, with serious implications for water resources, health and food security.
 
Thus, the possibility that the monsoon may become less stable as a result of climate change has serious consequences for India.
 
There is an urgent need to improve the science of monsoon predictions and its applications. Such measures will help millions to adapt to emerging scenarios and tide over the predicaments of climate change. Using state-of-the art climate models and observations, researchers are investigating the processes that control the monsoon rain and its variability and it is hoped that accurate scientific predictions about the unpredictable monsoon will be possible in the near future.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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COMMENTS

Dinesh Kumar Chauksey

10 months ago

Who is responsible/liable/accountable for maintaining adequate liquidity in Banks? Is it RBI or Gov (FM)? I think it should be RBI (I may be wrong ). If RBI fails in it's duty and gov has to put in to Banks some money (almost 1lac cr during RRR's tenure) . Then how does it impects the common men and Gov? This money could have been utilised for dev/infrastr etc purposes . This money was collected by taxing the Ppl Thought different types of surcharges/additional taxes.

MG Warrier

10 months ago

My comment posted here relates to another article. Regrets.

MG Warrier

10 months ago

We can go with Chidambaram’s assessment of the book. He said: “A learned, meticulous and honest account of Dr Subbarao’s five years at the helm of RBI. His intellectual integrity shines on every page of the book”. Though there are volumes and volumes covering the working and evolution of RBI, in this book, in less than 350 pages, the author gives a bird’s eye view of the role of RBI in the economic development of India and more importantly, makes the reader understand that every move by RBI affects citizens in one way or the other. The author has successfully explained delicate policy concepts handled by RBI without using ‘jargon and charts’. A word about this review by Sucheta Dalal. Perhaps this is the first one appearing in the media by someone who has gone through the book!

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