Govt and RBI are not adversaries: Subbarao

The differences of opinion with the government were only “natural” and the Reserve Bank of India and the government were not adversaries, said Duvvuri Subbarao, governor of the central bank, adding that both shared a common goal.

Subbarao has been critical of the government on issues such as autonomy of the central bank and other financial market regulators, responsibility of maintaining financial stability, need for fiscal prudence, etc. Recently, he talked about setting exemplary standards for corporate governance by the government with regard to its role as owner in public sector banks.

“We are not adversaries and we share a common goal. And I think some disagreement is natural,” he said. “There are disagreements within the government and there are disagreements between the government, regulators and public policy institutions. In fact, I would worry if there is complete agreement.” Subbarao was speaking at the launch of a book, Of Economics, Policy And Development: An Intellectual Journey, by I G Patel. The book is a collection of unpublished works of former governor of RBI, the late I G Patel. The unpublished notes and articles of Patel were edited by Subbarao’s predecessor Y V Reddy, and economist Deena Khatkhate.

Subbarao said collective wisdom emerged out of these disagreements, but added that there was a need to come up with a “wise mechanism” for achieving this. However, the governor had a suggestion for civil servants and economic advisors within the government. Subbarao – who was a bureaucrat and served as finance secretary before coming to Mint Road – urged civil servants to come up with advices that are feasible.

“Should the civil servant limit himself to giving objective advice or should he also be concerned about its feasibility?” he asked. “I am not saying that civil servants should be politicised or be less than honest. Only saying that they should suggest practical, workable, democratically feasible solutions.”

Subbarao left open the debate on if the code of conduct for government economists should be different from the code for bureaucrats. “In other words, should government economists also tailor their advice based on feasibility, or leave that to be determined by the bureaucracy and the political executives?” he said.