A collection of failures.

The present Governor of the Reserve Bank, Duvvuri Subbarao is stepping down on 5 September. Although he is not responsible for policy or spending, which unfortunately are controlled by politicians, his primary responsibility should have been to protect the rupee. This could only have been done by strictly controlling inflation and in this he has been a total failure. Consumer Price Index is still around 10% while the rupee has fallen by 15% to around 66 to the dollar. In his last lecture as Governor last week he admitted," With the benefit of hindsight, I must admit in all honesty that the economy would have been better served if our monetary tightening had started sooner and had been faster and stronger." Livemint, 30 August. We were saying this since 2009 but of course we have no power. It is true that he had to cope with severe pressure not to increase interest rates because the Congress wants growth at any cost to increase tax collections to waste on harmful social schemes to win elections. Even in October last year our most revered Finance Minister said," Growth is as much a challenge as inflation. If the government has to walk alone to face the challenge of growth, then we will walk alone." Being a very rich man, and with every expense paid by the taxpayer, he does not realise that inflation is killing the middle class and will eventually kill growth. Mr Subbarao does not have to stand for elections and so should have stood up to the bullies. What is the point in saying now," At its root, the problem is that we have been running a current account deficit well above sustainable level for three year in a row and possibly for a fourth year this year. We were able to finance the CAD because of the easy liquidity in the global system." What he failed to say was that all the growth between 2004 and 2008, during the first term of the Congress, was due to massive liquidity caused by very lax monetary policy by Fed Chairman, Alan Greenspan. The next day the Prime Minister said in Parliament, " The depreciation of the rupee and rise in dollar prices of petroleum products will no doubt lead to some further upward pressure on prices. The Reserve Bank will therefore continue to focus on bringing down inflation." Livemint, 31 August. Is that a promise or just hot air as usual, we wait to see.