Former Governor of the Reserve Bank of India Duvvuri Subbarao has accused the previous Congress-led United Progressive Alliance government of pushing him to cut interest rates and interfering in policy decisions during his term at the central bank. In his book Who Moved My Interest Rate?, Subbarao said the then finance ministers, Pranab Mukherjee and P Chidambaram, pressed for interest rate cuts and that RBI appointments were stalled when he refused to bow to their pressure, The Economic Times reported.
In the memoir, which hits stands today, Subbarao wrote, "The logic of why the Reserve Bank should compromise its judgment so as to become a cheerleader for the economy never appealed to me." He also differentiated between Mukherjee and Chidambaram's approach – "Mukherjee's stance was straightforward – that the Reserve Bank should ease the interest rate to support growth...Chidambaram, on the other hand, was more nuanced; he believed that I should cut rates in acknowledgement of his efforts at fiscal consolidation and would assert his arguments more firmly and forcefully."
Subbarao's term as RBI governor ended in 2013, and he was succeeded by Raghuram Rajan. His term was fraught with differences between him and the government, and he said he paid the price for "not falling in line". "The government has several ways of showing its displeasure, and the way they chose to do so with me was by going against my recommendations in the reappointment of deputy governors in the Bank," he wrote.
The former RBI governor's revelations come amid speculation over who will succeed Rajan. Prime Minister Narendra Modi's policy advisor Arvind Panagariya recently emerged the frontrunner for the role.
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