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Aug 10, 2011, 08.28 PM IST
The government today extended the tenure of RBI governor D Subbarao by two years. CNBC-TV18's Gopika Gopakumar and Latha Venkatesh sum up the market's reaction.
The mild-mannered bureaucrat who was lost in unknown unknowns just three years ago is today the market's unanimous choice to continue as governor of RBI for another two years. Minutes after the finance ministry confirmed his extension, CNBC-TV18 polled bankers, economists and bond dealers, and an over whelming 90% said that Subbarao's extension is good for the economy.
When asked to rate him in a scale of 1-10, 80% rated him high—ie between 8 and 10, only 20% rated him average between 5 and 7. Even those who rated him average in monetary policy rated him high on transparency, communication and clarity. Bankers said he has brought openness to the central bank. A small minority of bond dealers said he remained behind the curve on inflation till recently.
Subbarao appears to have won his extension partly because of want of good alternatives and partly because in a situation of international and domestic uncertainty, it was important for the government to have a man in RBI who knows his job.
True, Subbarao himself came into RBI a complete greenhorn and was faced with the Lehman crisis barely 10 days after taking over. But now having learnt on the job, it was only fair that the nation benefit from his experience.
From his early diffidence Subbarao has certainly come a long way. In the latest policy he shocked the market with a half a percentage point rate hike. Not only that, he also read the Riot Act to the government for not doing its bit on controlling deficit.
Chances are we are going to see a way more proactive and plain speaking governor in the next two years.
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