T N Ninan on former RBI governor Y V Reddy's new book

Former RBI Governor Y V Reddy offers a unique perspective of debates within govt

Yaga Venugopal Reddy was blessed with the opportunity to serve in interesting times: in the finance ministry during the foreign exchange crisis and reform burst of 1990-93, in the Reserve Bank of India (RBI) for more than a decade when the rules for the financial sector were being re-written, and then as chairman of the 14th Finance Commission that re-defined the fiscal relationship between the Centre and states. There is unlikely to be another quarter-century that sees so much action.

Among the key players of the time, Manmohan Singh has decided not to write his memoirs, P Chidambaram does not seem inclined to go beyond newspaper columns on current issues, and while Montek Singh Ahluwalia is writing his account it is intended as a much broader sweep of time and events. So it is just as well that we have from Reddy at least one insider’s view of what was going on in perhaps the most interesting period of Indian economic policy-making.

His account offers rich pickings for those who wish to understand the debates and differences within government on economic policy. About half the book is on his days in the RBI, first as deputy governor and then as governor; Reddy goes into the battles over interest rates and interventions in the currency market, the policy on participatory notes and how much room foreign banks should be given. The title, Advice & Dissent, forewarns you that Reddy quite often cast himself in the role of nay-sayer — with occasional consequences like an unwanted transfer or not getting a desired posting. Quite often, he simply wanted to get away from all the bother.

The story is told frankly but with restraint. Reddy is more forthcoming on individual encounters than, say, I G Patel with his terse manner of describing events. He is forthright in describing his run-ins with bosses, notably Chidambaram. And though he has admiration for Bimal Jalan’s crisis management, there is a constant back and forth between the two. On at least four occasions in his career, Reddy wanted to quit — or at least escape to some other place.

Everyone who has known Reddy is familiar with his capacity for intellectual flourish, his puckish humour, his willingness to stick his neck out and his wide reading (gifting books to those he met was a habit). This account of his working days shows also that he was (as he rightly describes it) “conservative but innovative” in his approach to issues, while being willing to disregard the finance minister’s wishes — to the point that Chidambaram complained to Manmohan Singh, who summoned Reddy to tell him, “I cannot be taking sides between Chidambaram and you.” Reddy went and apologised to his minister. Modestly, he says that the shine put on his record as governor posthumously was only because of the turn of events after his term was over in 2008.

Much of Reddy’s sense of independence and even prickliness must come, as people in Andhra Pradesh will tell you, from his being a Rayalaseema Reddy — a place and community known for hot-blooded responses. He came from a rural middle-class family that, despite owning agricultural lands and enjoying the regular income of a government salary, had constant financial worries — a drought would destroy the family’s fruit orchard, for instance. There is a hilarious account of his ambition, and efforts, to acquire a tooth-brush (which an older cousin used, whereas Reddy used fingers and tooth powder). English came late in his schooling, and at the rambunctious Government Arts College in Anantapur he took to attending communist rallies and sitting on rail tracks to agitate for liberating Goa. He was all of 15 then.

Advice & Dissent

My Life in Public Service

Author: Y Venugopal Reddy

Publisher: HarperCollins

Pages: 480

Price: Rs 799

Moving to the staid Vivekananda College in Chennai, he instilled some intellectual variety in the place as a student leader. Earlier, he had been keen on joining the National Cadet Corps with its parade ground drills, training camps and firing practice; when told by the recruiting officer that he was smaller than the rifle he had to hold, his ready repartee was typical: “Sir, I will grow taller; the rifle won’t!” Whatever he did, this Rayalaseema Reddy was not going through life quietly — or without a wisecrack.

Reddy began reading economics by accident, but took to teaching it as well as doing research for a PhD. He joined the government because his civil servant-father was intent on his joining the Indian Administrative Service, whose extraordinary social cachet is hard for someone outside the government system to fully grasp. Having joined the “tribe”, as he calls it, he increased his faith in the almighty as soon as he mounted a horse at the training academy in Mussoorie. Within months, he acquired the reputation of being a “difficult” officer.
 

Still, he was hand-picked by N T Rama Rao (NTR), the film star-turned-politician whose conversations with Reddy seem to have begun with questions like: “Venugopal Reddy garu, am I not a great man?” As for the Telugu Desam’s MLAs, NTR told Reddy: “You see those fellows?... If you put one rupee on their heads and auction them in the bazaar, they will be sold for half a rupee.”

A good bureaucrat knows how to manoeuvre his way to an objective, and to duck if he can’t. As governor, Reddy knew how to stymie announcements in the finance minister’s Budget speech. Much earlier, as Collector of Hyderabad, he was critical of Indira Gandhi’s Emergency rule, and had no wish to receive Sanjay Gandhi at Hyderabad airport, as instructed. The solution that a senior suggested: go on leave. In Reddy’s case, the manoeuvring and ducking was combined with a strong sense of commitment to the public good and to the under-privileged. Unlike many of his compatriots, he was also more than willing to stand his ground, as he did (futilely) on government guarantees for the Enron power project. For his pains, he was transferred to the commerce ministry.

In many ways, this is just the kind of book that you would want from a person who has spent time in the corridors of power. Some early history places the author in his context. The focus is on public policy choices and debates, the tale garnished with anecdotal flavouring. And two of the obvious traps are avoided: settling old scores, and/or reducing the tale to an account of what the butler saw. All of which makes this well worth a read.