Hell broke loose, when Aunty Janie (Former FED Chair) said that she was going to taper QE (quantitative easing) – taper tantrum, as it was popularly known as, started in May 2013. Cut to September 2013, Dr. Raghuram Rajan took over the reins of RBI; a man, that our markets, media and man on the street – all loved. And not so unexpectedly, he decided to go back to academia.
Mr. Urjit Patel, a trusted deputy, took over as the Governor. Markets were skeptical about him. He went about doing his business quietly – literally and figuratively. The first MPC was held under Mr. Patel’s chairmanship, revision of framework for Prompt Corrective Action for banks, putting in place the scheme for Sustainable Structuring of Stressed Assets to provide flexibility in restructuring, permitting banks to raise funds overseas through rupee denominated bonds are some of the key policy measures under his aegis.
Since earlier this year the rift between RBI and the Government became apparent. The autonomy of the age-old organization came under threat and quite evidently. Now how does one prioritize the health of the nation without stepping on the toes of a regulator is a tricky question. The current government is allegedly power hungry, which makes it (overriding RBI’s decisions) even more difficult, amidst the public criticism and cacophony. Only the 2nd time in the long history of RBI, Governor Urjit Patel stepped down earlier this week.
Not so surprisingly again, the incoming Governor is a bureaucrat as against from traditional economics background. Mind you, I am just making an observation here and not a qualifying statement. His initial statements are encouraging! “Talk to me” he tells the stakeholders thereby providing access and his ears. He promises to uphold the professionalism, core values, credibility and autonomy of the RBI. Thank you, we hope you do! He also calls for frank discussion with the Government, now whatever that means – let’s hope he helps ease the tension between his organization and the state.
I, for one, was completely bowled over by Dr. RR’s address on the first day in his office as the Governor. In a world of social media and it’s cacophony, it’s reassuring when men of authority and power keep the communication channels open and transparent. Mr. Das, vroom away but signals dena mat bhoolna, please.
Welcome to the mad rally!