Reserve Bank of India, Centre should work together to promote growth, equity: C. Rangarajan

C. Rangarajan, former chairman of the Economic Advisory Council to the Prime Minister, on Friday said the Reserve Bank of India (RBI) and the Centre should work together, understand each other and try to see that the basic principles are implemented without sacrificing the particular stand of the institutions concerned.

C. Rangarajan, former chairman of the Economic Advisory Council to the Prime Minister, on Friday said the Reserve Bank of India (RBI) and the Centre should work together, understand each other and try to see that basic principles are implemented without sacrificing the particular stand of the institutions concerned.

Mr. Rangarajan, who is chairman of the Madras School of Economics, said this was one of the critical aspects in the running of the government, and the entire system efficiently. Each institution has its own priority. The RBI has primary responsibility in certain areas, and it cannot sacrifice those primary responsibilities, he said.

Mr. Rangarajan, who was also the former RBI Governor, was speaking a conference on ‘India’s Contemporary Macroeconomic Themes’ organised by the Madras School of Economics (MSE), as a part of honouring and celebrating his 90th birthday.

He pointed out that it was due to the combination of people in the RBI and at the Centre that a set of reforms was pushed in 1991, and in subsequent years, which helped fast-track the rate of growth in the country.

Reforms, growth and equity are the triad of economic policy, he said. “Growth and equity are the two legs in which a country should work. If one leg is ignored then the country can only limp along. Therefore, there is a need to combine reforms with growth and growth with equity,” Mr. Rangarajan said.

As an example, he pointed out that between 2004-05 and 2011-12, there was a substantial reduction in the poverty ratio. “That was the time when the growth rate was good, and we also extended the food security programme and introduced the rural employment generation scheme, ” Mr. Rangarajan .

Mr. Rangarajan also said he has written in detail about the various roles played by him in his memoir Forks in the Road — My Days at RBI and Beyond. Referring to the current controversy over the role of the Governor, Mr. Rangarajan, who has also served as Governors of Andhra Pradesh, Odisha and Tamil Nadu, said he has written a separate chapter in the book on the role of the Governor.