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Business Tit-Bits

EXPERIENCE VERSUS EXPERTISE

The new governor of the Reserve Bank of India, who was hastily appointed by the government, is a highly experienced bureaucrat, with a questionable past, if Subramanian Swamy is to be believed. An IAS officer of the Tamil Nadu cadre, he retired last year and is apparently a most trusted aide of PM Narendra Modi, having launched and very staunchly defended demonetisation, at which time he was the Secretary, Department of Economic Affairs. Mr. Das is thus a member of the 15th Finance Commission and has also been India’s representative/sherpa, at the G20 nations. He is a seasoned babu, having successfully worked under three disparate FMs viz. Mr.Manmohan Singh, Mr. Chidambaram and Mr. Arun Jaitley, which explains his ability to fit into any given situation. This was reflected in his very first press conference, after assuming office as the RBI governor, where he emphasised the need to balance autonomy and accountability.

The new RBI governor has taken charge amidst a battle to preserve the autonomy and independence of the Reserve Bank, such that its professionals who have the skills/expertise in monetary economics and inflation-fighting run the show without interference from the government nominees on the board of directors. The very fact that Mr. Das spent his entire career as a government nominee and is therefore being appointed as the RBI governor in the present situation, will lead to an underlying assumption that he is siding with the government, at the expense of the RBI autonomy, unless he proves otherwise.

It is obvious that Mr. Das will be able to easily handle government pressures as the RBI governor, being a government man himself, but questions will linger on his technical competence to head the RBI and the need to transform himself into a capable central banker, for which he needs the technical skills of a monetary economist and an inflation warrior. Interestingly his lack of expertise for the job of RBI governor is being already questioned in many quarters, particularly by comparing his qualification, with those of his illustrious predecessors, who were highly educated economists and with proven expertise. A BJP leader from Gujarat has already questioned his qualifications to be the governor of the RBI.

It is not that the Reserve Bank governor has always been a highly educated and acclaimed economist, which Dr. Subbarao, Dr. Reddy etc. were not. The RBI has often been headed by bureaucrats like Mr. Das, as part of the government’s design, to encroach upon it s turf. Thus it has often been a babu that headed the RBI. This brings into focus, the ongoing debate of expertise versus experience. Mr. Das comes in with immense experience as a babu, but that is no substitute for the professional expertise needed to run the RBI. And merely because he may have worked under three FMs does not mean that he has the skills to run the RBI. An airline crew does not become a pilot merely because he flew for many years and so is the case of an assistant to a doctor. The balancing act of Mr. Das between autonomy and accountability is good, but he will need to learn and evolve with technical understanding, with the help of the technocrats at the RBI, who cannot be wished away in the battle between the government and the RBI.

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