The 22nd governor of the Reserve Bank of India (RBI), Dr Duvvuri Subbarao, steps into Mumbai?s Mint Street on September 5 with the task of bringing the Indian financial sector at par with the pace at which the Indian economy has matured. His first order of business is to bring inflation to below 5% and then set about implementing financial sector reforms, including an overhaul of RBI itself, to make India a hub of global financial services.
Finance minister P Chidam-baram announced Subbarao?s appointment at a press conference in the Capital on Monday. The 1972 batch IAS officer will relinquish position as finance secretary after incumbent governor Yaga Venugopal Reddy steps down on Friday. ?We place on record our deep appreciation for the services rendered by Dr Reddy as governor,? said Chidambaram about the change of guard at the central bank.
Subbarao?s appointment for a period of three years comes after weeks of speculation about the choice of Reddy?s successor. Rakesh Mohan, currently deputy governor at RBI, was also in the fray for the post. Reports said Mohan has instead been shortlisted for appointment as executive director to the World Bank.
A PhD in economics, the governor designate was secretary to the Prime Minister?s economic advisory council before he took over as secretary, economic affairs, in the finance ministry in May 2007. He was appointed finance secretary two months later.
Dr Subbarao studied at IIT Kanpur and was one of the first IITians to join the civil services.
Economists and analysts said the governor designate?s key challenges would be to push ahead with the financial sector reforms programme developed in the Raghuram Rajan report and the earlier Percy Mistry report.
?If this is done right, India?s GDP growth will accelerate, even holding the existing savings rate constant, and financial services exports will commence. This could be a bigger export than IT,? said an expert on the sector.
Subbarao?s departure from North Block will mean Chidambaram will also have to appoint a new secretary.