This refers to the Lunch with BS with Arvind Virmani (“Professor of reform,” August 23). One statement of Virmani needs to be corrected for the record. Referring to the note he prepared on exchange control reform he says: “That led to the formulation of the dual exchange rate policy or the liberalised exchange rate management system.” RBI Governor S Venkitaramanan appointed a three-man committee (without a chairman) including me, P B Kulkarni, chief officer of the department of external investments and operations, and O P Sodhani, chief officer of the exchange control department, to formulate a scheme to reform the exchange rate system with a view to building up our reserves. It was unique in that it was set up on the governor’s oral instruction to avoid any information leaks and possible impact on the market. We met without a formal agenda papers or minutes of meetings but discussed and produced one final written report for the governor containing the dual exchange rate system. We called it the New Exchange Rate Arrangement (NERA) to rhyme with FERA (Foreign Exchange Regulation Act). But the governor preferred “Liberalised Exchange Rate Management System (LERMS)”. It was incorporated in the report of the Committee on Balance of Payments without acknowledgement and later in the Budget. I hope those who are writing the fourth volume of RBI’s history will have access to the Committee’s final report and make the position clear. It is part of history, not a question of taking credit.
A Seshan, Mumbai
Readers should write to:
The Editor, Business Standard,
Nehru House,
4, Bahadur Shah Zafar Marg,
New Delhi 110 002,
Fax: (011) 23720201;
letters@bsmail.in
All letters should have a postal address and telephone number