Duvvuri Subbarao , an Indian Economist, Central Banker and Civil Servant was the 22nd Governor of Reserve Bank of India. He served under the Prime Minister Dr Manmohan Singh. Here is an exclusive interview with him.
1. Is Indian Prime Minister Mr.Modi with his ambitious plans for the country, running ahead of the ground reality (i.e.) the political nature and the legislations to be passed?
On the contrary, I believe Prime Minister Modi is very much rooted in reality. His programmes reflect a deep understanding of India’s problems and priorities. The legislative initiatives of the Government too reflect priority reform agenda. The Prime Minister brings the rich grass root experience from his successful stint in Gujarat to bear on his policy making at the national level. In evaluating him, we should understand that India is far more complex and diverse than Gujarat. Besides, given the size and the democratic structure of India, Chief Ministers are better positionedto implement the economic and governance reform agenda than the Prime Minister. In order to push his reform agenda, I believe, the PM should build partnerships with state Chief Ministers cutting across party lines.
2. There is a perception that the country is headed towards more saffronism. Is the secular order under threat now?
I am not sufficiently informed to comment on this. I must say though that I was heartened by the fact that during the campaign last year, candidate Modi focused almost exclusively on economic growth and steered clear of divisive issues. I hope he maintains that discipline not only at a personal level but across his government and his party.
3. What is your take on the new economic order ushered in by the China-led AIIB?
It is interesting that you call this a ‘new economic order’. Whether or not the AIIB ushers in a new economic order will depend on how its policies and lending priorities evolve over time. It is too early to pass judgement on that. The AIIB has been conceived in reaction to the lending policies and procedures of the World Bank and the regional development banks like the ADB. The AIIB needs to demonstrate that it can build a more efficient business model without compromising on credit quality and governancestandards. Besides, the focus of AIIB is on lending for infrastructure for which there is enormous demand across emerging and developing economies. The AIIB has to be nimble and innovative in meeting this demand. How it accomplishes this task will determine whether or not AIIB is usheringin a new economic order.
4. Do you think in the formation of the China-led AIIB, is it more beneficiary for Asia or for China?
If AIIB, in fact, delivers on its promise, it can be mutually beneficial. From the supply side, there is China with surplus resources looking for investmentopportunities. From the demand side, there are the developing and emerging economies with huge need for infrastructure investment. AIIB is a mechanism for matching that supply and demand, and that arrangement can bea win-win opportunity for both sides.
China has for many years been investing its surplus resources in African and Asian economies. AIIB, in fact, implies China’s shift away from bilateral lending towards multilateralfinancing. I think such a shift will certainlyinvolve greater lending discipline and higher quality of governance which is good both for the lender and the borrower.
5. What role do you see India playing in this shift of economic power to the East?
Thinking about what role India can play in the ongoing global economic shift, in my view, amounts to inversing priorities. Instead, we should focus on raising our growth rate and reducing our poverty rate. That and that alone will raise our global clout, and in turn determine the role India can play in the global economy. Just look at how China is respected in the global power play today. China did not go about first deciding what role it should play in the global shift of economic centre of gravity. Instead, itfocused on its own priorities, and global clout came as a byproduct. In that respect, China shouldbe a role model for us.
6. Do you think Indian economic growth is up to the mark?
Growth is certainly picking up, notwithstanding the controversy surrounding the numbers and the methodology. In thinking about growth, two things are important. First, we need to accelerate our growth rate even further. China clocked double digit growth for over 15 years on a trot, and demonstrated that such a ‘miracle’ is within the realm of possibility. Second, we should note that India has more poor people than the entirecontinent of Africa. Ensuringthat growth translates into poverty reduction is therefore an imperative. Experience shows that this is not as automatic as we once thought. While on the pace of growth, China should be our role model, on the quality of growth, we should aim to do far better than China.
7. What do you think are the achievements in your working stints with Dr Manmohan Singh and Mr. P. Chidambaram?
Both Dr. Manmohan Singh and Mr. Chidambaram had rich experience in public life; both were highly educated, mature and intelligent. Working closely with them was a rewarding learning experience for me.
8. What difference do you see between the economy savvy Manmohan SIngh- P.Chidambaram and Narendra Modi-Arun Jaitley pairs?
Not having been exposed to the Modi-Jaitley pair, I am not in a position to make a comparative evaluation. One thing, I can say though is that in a democracy, a ministerneed not necessarily have deep domain knowledge. He should be intelligent enough to appreciatethe advice given to him and take a decision based on that advice in the larger public interest.
9. Do you think politicians in Indian succumb to bureaucracy? How much difficult is it for an IAS officer to work in such a situation?
In a democracy, the prerogative of final decision vests with the political executive. The task of the bureaucracy is to process policy issues, argue the pros and cons and present advice candidly. There are of course challenges, but I don’t believe that the political executive in India can be gamed by the bureaucracy.
10. Do you think in India there Government is able to communicate its policies to people?
The nature of communication by the government is definitely improving. The challenge is to reduce complex issues to a level where people can understandand relate to. It is only when people are able to understand issues that they can influence government decision making and extract accountability from the elected executive.
11. What are the areas of business do you think can people take up between Singapore and India?
Singapore is a major financial hub in Asia. India is in need of enormous financing for its infrastructure development. There is a clear match there.
12. . What are your priorities in the current stage of your retired life?
In the one and a half years of since I stepped down from the Governorship of the Reserve Bank, I have been attending conferences, giving speeches and am currently a Visiting Fellow in National University of Singapore with concurrent appointment with the Business School, ISAS and the Monetary Authority of Singapore. I am also writing on issues in central banking.
13. How do you keep yourself fit?
Well, I try to maintain an active life style but do give in to temptations when it comes to food.