Anchoring inflationary expectations, maintaining financial and price stability, pursuing financial sector reforms and, finally, pushing through real sector reforms will be the key priorities for Dr Duvvuri Subbarao, who took over as the 22nd governor of the Reserve Bank of India (RBI) for a three-year term starting today.
Speaking to mediapersons after the joining ceremony at the RBI headquarters, Subbarao placed on record his admiration and respect for outgoing governor Y V Reddy. “He has served the organisation with dignity and intellectual integrity for five years and it will be a challenge for me to leave up to the higher standards set by him,” the new RBI governor said.
Subbarao takes over from Reddy at a time when inflation has shot up above 12 per cent and interest rates, both for deposit mobilisation and lending for banks, have also peaked.
Consequently, interest rates for firms as well as the retail sector have increased sharply, acting adversely for the economic growth, said market players.
Prior to this, Subbarao was the Finance Secretary in the Union Ministry of Finance. Other assignments held by him earlier are Secretary to the Prime Ministers’ Economic Advisory Council (2005-07), Lead Economist in the World Bank (1999-2004), Finance Secretary to the Government of Andhra Pradesh (1993-98) and Joint Secretary in the Department of Economic Affairs, Union Ministry of Finance (1988-1993).
In public finance, Subbarao was involved in the initiation of financial reforms at the state level and had managed a flagship study on decentralisation across major countries of East Asia, including China, Indonesia, Vietnam and Philippines.
He is credited with the financial turnaround of Andhra Pradesh in late nineties, when the state had slipped into an unprecedented financial crisis.