Who moved my interest rate?

Sometime in 1972, Duvvuri Subbarao debates Man is condemned to be free of Jean Paul Sartre. And the gentleman in Who moved my interest rate? writes, 'The governor is condemned to be free! Ravi Krishnan and Govy take kindly to Duvvuri Subbarao; 'decent, fine man', they remark. In July 2016, the RBI is condemned to be unfree as three Finance Ministers - Pranab Mukherjee, Pallaniappan Chidambaram and Arun Jaitley - and an obliging RBI governor Dr. Raghuram Rajan do away with RBI as a stand alone thinker on public finance. With Duvvuri Subbarao listed to be RBI governor, he walks into a chat with P. Chidambaram and Monetary Policy Committee. 'My substantive stance was that an MPC was the direction in which we must go but that the governor must have a veto, at least during the transition period until the institutional structure stabilized. Chidamabaram did not agree. His point was that the governor should see himself as the chairman of a corporate board and try to persuade the MPC members to his point of view. And if he failed to do that, he should defer to the majority view. I agreed with him but countered that the parallel with a corporate board would work only if the members of the MPC did not owe any allegiance to the government for their appointment. They might, given the institutional structures of our system, feel pressured to push the government's point of view in the MPC,' scripts Subbarao. Today, the proposed MPC will have six members, all government nominees; after all RBI is a government body, its Rs.5 crore equity entirely owned by New Delhi; the governor and deputy governors are selected by New Delhi; governors are mostly finance secretaries (including Duvvuri Subbarao); has been IAS territory for long. Never has a practicing banker been an RBI governor. What is freedom of RBI as an institution? Somewhere in his well written memoir, Subbarao talks of Relativity theory and Quantum Mechanics being inconsistent with each other. Quantum Mechanics of Hisenberg is about uncertainty while Relativity is of certainty; something like growth being a given and inflation not given. New Delhi is for growth, price be blown; RBI believes in growth at a steady price. There sure will be differences; two finance ministers appreciating many sides of the table having a say were Dr. Manmohan Singh and Yashwant Sinha; the table should resonate to one voice, believe Pranab Mukherjee, P. Chidambaram and Arun Jaitley. 'One of Dr. Manmohan Singh's strong qualities is that he is a good listener and I always found him eager to get the Reserve Bank's perspective on every macroeconomic issue. The fiscal situation would, of course, figure in our conversation and my tale of woe about how the fiscal stance of the government was undermining the Reserve Bank's anti-inflation position was standard fare. To his enormous credit, he never interfered in the policy action. 'I hope you've settled this with the finance minister' was all that he'd say. I never felt comfortable about this bit of the conversation but I would nevertheless tell him of the finance minister's reservations, and the matter would rest there.' We will not see any such exchange as the RBI becomes a desk in North Bloc. Sadly, facilitated by Dr. Raghuram Govind Rajan. Where me has a quarrel with Subbarao is the absence of stray notings on rural credit, its regular flow to farmers dead and alive, ... in fact RBI governors have always been shut on a regular flow of credit to farmers while doing the same to avert seizures in the corporate and broking economy. Rural credit was and is a blindspot for RBI. It is ever the concern of New Delhi. Corporates walk in and out of RBI; are on RBI boards; has an ordinary farmer been a presence at RBI Towers? Has a farmer walked into the air conditioned offices of Nabard at Bandra? Subbarao mentions financial inclusion, thats about all. RBI governors, after retirement, are famous for hanging around in various committees and commissions. Thanks be. Subbarao is a private citizen. Need not have shut out private self from the memoir. Subbarao will gather many eyes and not sit in book shelves as government gears to move interest rates.