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Mr Subbarao took over as the RBI governor in 2008.
New Delhi:
Union Minister Smriti Irani on Tuesday attacked the Congress over former RBI Governor Duvvuri Subbarao’s claim that the finance ministry under Pranab Mukherjee and P Chidambaram used to pressure the RBI, saying it underscored the grand-old party’s “penchant for deceit” over national interest.
In his recent book ‘Just A Mercenary? Notes from My Life and Career’, Mr Subbarao has said that the finance ministry under Mukherjee and Mr Chidambaram used to pressure the RBI to soften interest rates and present a rosier picture of growth to shore up sentiments.
The former RBI governor in his memoir also wrote that there was ‘little understanding and sensitivity’ in the erstwhile government of the Congress-led United Progressive Alliance (UPA) on the importance of the central bank’s autonomy.
“When the grand-old Congress party wanted Reserve Bank as the government’s cheerleader to hoodwink people of India,” Ms Irani said in a post on X, sharing a media report published on Subbarao’s claim in his memoir.
When the grand old Congress party wanted Reserve Bank as the Government’s Cheerleader to hoodwink people of India
https://t.co/mkRNB03Z7XThe revelations from former RBI Governor Subbarao’s memoir provide a glaring instance of the institutional abuse perpetrated by the…
— Smriti Z Irani (Modi Ka Parivar) (@smritiirani) April 16, 2024
“The revelations from former RBI Governor Subbarao’s memoir provide a glaring instance of the institutional abuse perpetrated by the Congress. The misconduct not only endangered our institutions but also underscores Congress’s penchant for deceit over national interest,” she said.
“Instead of fostering a robust Indian economy, they chose to mislead our citizens, betraying their aspirations for a prosperous country. No wonder India plummeted into the fragile five economies during the UPA’s decade-long misrule and mismanagement,” she added.
Mr Subbarao was the finance secretary (2007-08) before taking over as the governor of the RBI for five years on September 5, 2008, a few days before the breakout of the Lehman Brothers crisis.
Lehman Brothers crashed into bankruptcy on September 16, making it the biggest corporate failure in history.
In a chapter in his book titled ‘Reserve Bank as the Government’s Cheerleader?’, Mr Subbarao recalled that pressure by the erstwhile UPA government was not confined to the Reserve Bank’s interest rate stance. On occasion, it extended to pressuring the RBI to present rosier estimates of growth and inflation at variance with the bank’s objective assessment.
“I remember one such occasion when Pranab Mukherjee was the finance minister. Arvind Mayaram, the finance secretary, and Kaushik Basu, the chief economic adviser, contested our estimates with their assumptions and estimates, which I thought was par for the course,” he wrote.
What upset him, Mr Subbarao said, was that, almost seamlessly, the discussion moved from objective arguments to subjective considerations, with suggestions that the Reserve Bank must project a higher growth rate and a lower inflation rate in order to share responsibility with the government for ‘shoring up sentiment’.
“Mr Mayaram went to the extent of saying in one meeting that ‘whereas everywhere else in the world, governments and central banks are cooperating, here in India, the Reserve Bank is being very recalcitrant’,” he recalled.
Mr Subbarao said that he was invariably discomfited and annoyed by this demand that the RBI should be a cheerleader for the government.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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