Why Two year Extension to Subbarao?
Recently, the PMO office has announced a two-year extension for Reserve Bank of India governor D Subbarao.
- We note that it’s Finance Ministry, which deals with the RBI Governor appointments, but this time PMO, makes a statement and the objective of this change in the tradition was to provide comfort to the market, which is volatile and speculative amid the US rating downgrade and the slowdown in debt-ridden European economies.
- Subbarao is an Andhra Pradesh cadre IAS officer, went to RBI at the height of the global financial crisis. He worked closely with the government as well as the SEBI to take steps in a bid to limit the damage to the Indian economy.
- Mr. Subbarao is candid in his opinion and was not reluctant even in protesting against the finance ministry’s move to set up a panel headed by the finance minister to adjudicate in disputes between regulators on hybrid products such as unit-linked insurance plans, which, in its earlier avatar, was a mix between a mutual fund scheme and a life insurance or pension plan. And the RBI dropped its opposition only after the Governor of RBI was appointed as vice-chairman of the panel with the other financial sector regulators as members.
- Thereafter, Subbarao is also known to have argued against the Financial Stability & Development Council (FSDC) on the grounds that the new panel was not required in current state of inter-regulatory co-ordination, and the new panel, which would be headed by finance ministry, would infringe on RBI’s role of dealing with financial stability.