D Subbarao appointed as the new RBI governor

Dr. Duvvuri Subbarao will be the new governor of Reserve Bank of India. He will take charge on September 05- the day when the present governor Y V Reddy term comes to end. Ending weeks of speculation over the man who will preside over the country's economic policy for the next five years, Finance Minister P Chidambaram announced the Finance Secretary D Subbaro's name at a press conference here on Monday.

Superseding the two hot contenders in the race- deputy governor Rakesh Mohan, in particular and deputy chairman of Planning Commission Montek Singh Ahluwalia- as the government's ultimate choice for the RBI governor, D Subbarao- a pragmatist with a deep and close knowledge of monetary policies has a challenging time ahead in the wake of inflation hovering around 12.50 percent mark.

His job as the RBI governor is decided at least for a few months to lower down the inflation but without paralysing growth.

Dr. Subbarao is presently holding the post of Finance Secretary in the Ministry of Finance. Prior to this, he was Secretary, Department of Economic Affairs in the Ministry of Finance. He also served Secy to PM's economic advisory council. He has also held significant posts in this area and achieved wide experience on issues in public finance. As a finance secretary he was the point person between the RBI and the government which has been desperate to curb prices.

He is said to be firm on rolling back inflation, which he once termed as “the king of tax on the poor”, to a single-digit level.

What made his way to the post of RBI governor ahead of the chief contender deputy governor Rakesh Mohan, though is not clear, but certainly outgoing governor's reluctance to accept a one-year extension helped him in the long run. Reddy wanted a three-year extension to his term.

An IIT-Kanpur alumnus, D Subbarao belongs to the 1972 IAS batch. He had topped the civil services exam in 1972 and was assigned the Andhra Pradesh cadre. Subsequent to joining the IAS, he did his MS in Economics from Ohio State University (1978) and was a Humphrey Fellow at MIT during 1982-83. He did his Ph. D in Economics and worked as an economist at the World Bank from 1999-2004.

The RBI governor is the second most important body in India's financial hierarchy after the finance minister. Because, it is the one, which controls the monetary policy, which eventually decides the direction and status of the country.