A Treasure of Tales  

Express News Service

In his memoir, Forks In The Road: My Days at RBI and Beyond, former RBI governor C Rangarajan delves into his policy thoughts and actions between the period 1982 and 2014. Being an avant-garde intellectual scholar, both in research and teaching, he joined RBI in 1982, which he refers to as accidental, unlike the planning he was used to  in his world of academia.

As an economist, holding a PhD thesis from the University of Pennsylvania on aspects of monetary transmission mechanisms, and a faculty at various international and national universities, he seemed apt to steer RBI at a time when it badly needed reforms, particularly due to the incremental changes in the policy regime towards the end of the 20th century. With economic rationale pressing for a transition, since the mid-1970s, from import-substitution industrialisation to trade-led growth, India––characterised as a ‘soft-state’––was bracing for a push towards political-economy reforms.

Several governmental committees as well as annual RBI reports––in some of which the author played a key role––that looked into the autarkic industrialisation broadly proposed that India was in dire need of imports and a paradigm-shift in state intervention for deregulation and liberalisation policy targets. Rangarajan affirms that it was economist Sukhomoy Chakarvarti’s 1985 report that was a major landmark in embracing the changes in the short-term money market to facilitate trade-led growth, and bolstering the economic transition discourse. Moreover, it was the selling of 182 days treasury bills through auction, and RBI exercising its autonomy in a fiscally prudent manner in relation to interest rates––a hard decision Rangarajan had taken––that opened up the basis for intense transition-dialogue between the central bank and government.

The chapter on the economic crisis years, 1990-92, and RBI’s handling of it is replete with the reminiscences of the author’s leadership. The core issues, including deteriorating fiscal and balance-of-payment situations, breaking point of import compression, and burgeoning current account deficit, along with fast depreciation of rupee, needed quick and deft solutions. Rangarajan followed ‘downward adjustment’ policy, and the RBI, in its daily fixation of the exchange rate vis-à-vis a basket of currencies, decided to ‘devalue’ the currency in two stages. This was undoubtedly the most courageous move that helped resolve the crisis.

The book is divided into three parts. The author takes a historical-institutional approach to explain how RBI’s autonomy worked against the forks in the road to banking sector reforms and the episodic economic transition that runs as a common thread in the first two parts. In the final segment, he chronicles his successful foray outside the central bank.

In the concluding chapter, he ruminates about the downturn in growth after 2011-12 due to lack of capacity building, the increase in non-performing assets of banks, the sharp rise in price level, and in recent times, the disruptions caused by Covid-19 and the Russia-Ukraine war. He is sanguine though, about the government’s efforts to carry along growth with equity, which will place India’s economic statesmanship at the global level.

As a Padma Vibhushan awardee––the medal he says one gets by the game of chance––Governor of Andhra Pradesh, Chairman of Twelfth Finance Commission, Rajya Sabha Member, Chairman of Economic Advisory Council to PM (Manmohan Singh) and, finally, Chairman of Madras School of Economics, Rangarajan’s journey in influencing public policy is remarkable, and his professional life, back to academia, has now come full circle. Although the book avoids uncannily the politics behind his policy decisions, it is nevertheless a memoir conveyed lucidly and a life story communicated, through reflections, about the many lessons to be learnt. 

Forks In The Road: My 
Days at RBI and Beyond
By: C Rangarajan
Publisher: Penguin
Pages: 304
Price: Rs 699

<br /> In his memoir, Forks In The Road: My Days at RBI and Beyond, former RBI governor C Rangarajan delves into his policy thoughts and actions between the period 1982 and 2014. Being an avant-garde intellectual scholar, both in research and teaching, he joined RBI in 1982, which he refers to as accidental, unlike the planning he was used to  in his world of academia.</p> <p>As an economist, holding a PhD thesis from the University of Pennsylvania on aspects of monetary transmission mechanisms, and a faculty at various international and national universities, he seemed apt to steer RBI at a time when it badly needed reforms, particularly due to the incremental changes in the policy regime towards the end of the 20th century. With economic rationale pressing for a transition, since the mid-1970s, from import-substitution industrialisation to trade-led growth, India––characterised as a ‘soft-state’––was bracing for a push towards political-economy reforms.</p> <p>Several governmental committees as well as annual RBI reports––in some of which the author played a key role––that looked into the autarkic industrialisation broadly proposed that India was in dire need of imports and a paradigm-shift in state intervention for deregulation and liberalisation policy targets. Rangarajan affirms that it was economist Sukhomoy Chakarvarti’s 1985 report that was a major landmark in embracing the changes in the short-term money market to facilitate trade-led growth, and bolstering the economic transition discourse. Moreover, it was the selling of 182 days treasury bills through auction, and RBI exercising its autonomy in a fiscally prudent manner in relation to interest rates––a hard decision Rangarajan had taken––that opened up the basis for intense transition-dialogue between the central bank and government.googletag.cmd.push(function() {googletag.display(‘div-gpt-ad-8052921-2’); });</p> <!-- WP QUADS Content Ad Plugin v. 2.0.85 --> <div class="quads-location quads-ad200503 " id="quads-ad200503" style="float:none;margin:0px 3px 3px 3px;padding:0px 0px 0px 0px;" data-lazydelay="0"> <!-- WP QUADS - Quick AdSense Reloaded v.2.0.85 Content AdSense async --> <ins class="adsbygoogle" style="display:block;" data-ad-format="auto" data-ad-client="ca-pub-7550963679842137" data-ad-slot="1823845571"></ins> <script> (adsbygoogle = window.adsbygoogle || []).push({});</script> <!-- end WP QUADS --> </div> <p>The chapter on the economic crisis years, 1990-92, and RBI’s handling of it is replete with the reminiscences of the author’s leadership. The core issues, including deteriorating fiscal and balance-of-payment situations, breaking point of import compression, and burgeoning current account deficit, along with fast depreciation of rupee, needed quick and deft solutions. Rangarajan followed ‘downward adjustment’ policy, and the RBI, in its daily fixation of the exchange rate vis-à-vis a basket of currencies, decided to ‘devalue’ the currency in two stages. This was undoubtedly the most courageous move that helped resolve the crisis.</p> <p>The book is divided into three parts. The author takes a historical-institutional approach to explain how RBI’s autonomy worked against the forks in the road to banking sector reforms and the episodic economic transition that runs as a common thread in the first two parts. In the final segment, he chronicles his successful foray outside the central bank.</p> <p>In the concluding chapter, he ruminates about the downturn in growth after 2011-12 due to lack of capacity building, the increase in non-performing assets of banks, the sharp rise in price level, and in recent times, the disruptions caused by Covid-19 and the Russia-Ukraine war. He is sanguine though, about the government’s efforts to carry along growth with equity, which will place India’s economic statesmanship at the global level.</p> <!-- WP QUADS Content Ad Plugin v. 2.0.85 --> <div class="quads-location quads-ad200503 " id="quads-ad200503" style="float:none;margin:0px 3px 3px 3px;padding:0px 0px 0px 0px;" data-lazydelay="0"> <!-- WP QUADS - Quick AdSense Reloaded v.2.0.85 Content AdSense async --> <ins class="adsbygoogle" style="display:block;" data-ad-format="auto" data-ad-client="ca-pub-7550963679842137" data-ad-slot="1823845571"></ins> <script> (adsbygoogle = window.adsbygoogle || []).push({});</script> <!-- end WP QUADS --> </div> <p>As a Padma Vibhushan awardee––the medal he says one gets by the game of chance––Governor of Andhra Pradesh, Chairman of Twelfth Finance Commission, Rajya Sabha Member, Chairman of Economic Advisory Council to PM (Manmohan Singh) and, finally, Chairman of Madras School of Economics, Rangarajan’s journey in influencing public policy is remarkable, and his professional life, back to academia, has now come full circle. Although the book avoids uncannily the politics behind his policy decisions, it is nevertheless a memoir conveyed lucidly and a life story communicated, through reflections, about the many lessons to be learnt. </p> <p>Forks In The Road: My <br /> Days at RBI and Beyond<br /> By: C Rangarajan<br /> Publisher: Penguin<br /> Pages: 304<br /> Price: Rs 699<br />