The policymaker who made key choices along our reforms path
Rangarajan’s memoir offers a compelling look at some of the seminal decisions that have shaped India’s economy for the better
An authoritative, long-awaited account of India’s recent economic history is out that takes on critics of the 1991 reforms conclusively, and establishes Manmohan Singh as the chief agent of change to whom credit should go for the success that followed. The book fills the gaps in our knowledge and understanding of the years before and after. Its author, C. Rangarajan was a bookish academic once. His thesis at the University of Pennsylvania was on an aspect of the monetary transmission mechanism in the US. His entry to the Reserve Bank of India (RBI) was by accident. The year was 1982. The economy was run with controls. RBI set the interest rates that banks would pay on saving deposits. Every morning, Rangarajan fixed the rupee-dollar exchange rate, and, among other roles, negotiated with the International Monetary Fund (IMF). India’s balance of payments tended to tether in and out of difficulty, tipped over by oil prices, hauled back with help from the IMF and inflows into NRI deposits. The government was in the habit of exploiting the power of RBI’s rupee-printing presses for money creation so that it could spend beyond its means.