Finance Secretary D Subbarao appointed RBI Governor

[Sukumar.N]

NEW DELHI/MUMBAI: The government on Monday appointed finance secretary
Duvvuri Subbarao as the new governor of the Reserve Bank of India
(RBI). He will succeed Dr Y V Reddy, whose term ends on September 5.

“The government has decided to appoint D Subbarao as the next governor
of RBI,” finance minister P Chidambaram told reporters. Mr Subbarao
would be appointed for a three-year period. He may, however, be
considered for reappointment for another two years, as the RBI Act
provides for appointment of a governor for a period of up to five
years.

This puts an end to speculation over who would take over the reins of
the central bank from Mr Reddy, whose tough but sure handling of
monetary policy has served India well in these times of global
financial turbulence. RBI deputy governor Rakesh Mohan was among those
who were in active consideration for the post.

If he chooses not to continue at RBI, a younger professional economist
could well take his place. Chief economic advisor Arvind Virmani is a
likely candidate. An old RBI hand and the current vice-chancellor of
Pune university Narendra Jadhav is another.


Career Graph
2008 September RBI Governor
2007 May 1 Finance Secretary
2005 March 2 Secretary to Planning Commission
1990 June 4 Joint secretary Planning Commission
1988 July 15 Director in ministry of finance & company
affairs
1972 IAS Officer


Prior to his appointment as finance secretary in April 2007, Mr
Subbarao served as secretary to the Prime Minister’s Economic Advisory
Council headed by Dr C Rangarajan. A brief stint as secretary,
department of economic affairs, filled the gap between these two
posts. He topped the civil services batch of 1972, as he did in most
exams during his academic career, and worked in Andhra Pradesh,
including a stint as finance secretary there.


Exclusive: Subbarao to ET

Within minutes of landing from his tour of Brazil, ET spoke to the jet-
lagged finance secretary, who was still taking in the news of his
appointment as RBI governor. “I have just got the news; it is a big
responsibility. I can only say I will do everything to carry out my
responsibility effectively.'' Although Mr Subbarao declined to
elaborate on any issue in particular, the biggest challenge would be
to keep inflation under check. He maintained that he did not have any
formal indication of his new responsibility although he was willing to
take up the challenge.


Five years ago, when the then governor Bimal Jalan left RBI, well
before the end of his extended term, he told his successor Yaga
Venugopal Reddy that he was leaving when the going was good and it
could be Mr Reddy’s turn to weather a storm.

Duvvuri Subbarao also takes over as the 22nd RBI governor at a
critical time when there are a lot of headwinds ahead. The macro-
economic situation is challenging with the slowing down of growth and
inflation worries. He will have to get into action straightaway with
the next policy review in October.

The other major test would be the review of the opening up of the
banking sector to foreign banks and also approval of fresh bank
licences, including to corporates.


Source : Economic Times