SUBBARAO V/S BERNANKE - THE SAME DIFFERENCE
By Ruma Dubey
There is so much gloom and doom spread around – another probable S&P rating downgrade for India, falling auto sales, IMF cutting 2012 GDP growth forecast to 4.9%, the Indian rupee vis-à-vis the US dollar once again slipping, the rotting Indian politics, scams, rising costs, the shouting matches on news channels; a general feeling of despondency.
And when we already have so much to chew on, we decided to present you with something ‘light’ which could help lift some clouds.
US Federal Bank Chief is here in India, meeting our RBI Chief, Duvvuri Subbarao and this is the first time a serving Fed chairman has visited the Indian central bank. Both the chiefs have been in office at probably one of the most trying times in recent history as far as economy is concerned. There is immense pressure on both of them, from the Govt as well as industry to bend but both have stuck on to their convictions. Ben Bernanke did have to give in to QE3 in mid-Sept but this seems to have gone in his favour as the recent employment numbers suggest that his QE3 could indeed change things.
On the other hand, we have Subbarao who has stood tall till now and not given into pressures of bringing down inflation. He has earned as many admirers as critics though the later outweigh the former as many blame him for the slowing growth. But he has rightly put the Govt in the dock, saying bringing down interest rates alone will not improve the economy unless the Govt breaks from its deep slumber. The Govt has acted, shown it has the will and hopefully, when he announces the Credit Policy on 30th Oct, maybe he will help boost moods by reducing rates.
While the prime focus of Bernanke has been to provide stimulus to improve employment and increase growth that of Subbarao has been to keep a hawk watch on inflation and ensure that there is enough liquidity in the system. When they meet today, maybe Bernanke will give Subbarao a few lessons on how to stimulate growth while Subbarao could ask Bernanke the effect of such easings and printing so much money on the world economy, especially on India.
Both are different but there is a line of similarity running between the two, especially the trying circumstances. Given below, in a nutshell are the nuances of both the men. We cannot compare apples and oranges but certainly the characteristics of two fruits.
| DUVVURI SUBBARAO | BEN BERNANKE |
| RBI Governor | Chairman of US Fed Reserve |
| Aim it to issue bank notes, formulate, implement and monitor monetary policy, maintain price stability and ensure adequate liquidity in system | Aim is formulate the monetary policy to promote the objectives of maximum employment, stable prices and moderate long-term interest rates. |
| Born on 11 August 1949 | Born on 13th Dec, 1953 |
| Graduated in Physics Bsc Hons. from IIT Kanpur in 1969; Msc in Physics from IIT Kanpur and topped the IAS exam in 1972. Masters degree in economics from Ohio State University in 1978, Humphrey Fellow at MIT in 1982, received a Ph.D. in Economics from Andhra University in 1998. | Bachelor of Arts in economics summa cum laude in 1975 from Harvard; doctor of philosophy degree in economics from MIT in 1979 |
| Married to Urmila Subbarao, also an IAS bureaucrat of the 1975 batch; Has two sons named Mallik and Raghav and both are IIT alumni. | Married to Anna, who is a B.A. from Wellesley College and M.A. from Stanford University. Have two children – Joel and Alyssa. |
| He assumed office as RBI chief on 5th Sept, 2008 | Assumed office as Fed chairman on 1st Feb, 2006 |
| He is the 22nd Governor of RBI | He is the 14th Chairman of Fed. |
| He is scheduled to retire on 4th Sept, 2013 | His second term ends on 31st Jan, 2014 |
| Criticized for sacrificing growth to curb inflation, which as such seems to be out of control and for keeping the interest rates high for too long. | Criticized for failing to foresee the financial crisis, for bailing out Wall Street, for infusing huge amounts of money and for backing an easy money policy earlier in the decade that fueled the housing bubble. |
| He remains focused on combating inflation, which remains stubbornly high around 7.5%. He raised rates by 3.75% over past 3 years, making RBI the most aggressive central bank in Asia. | He has signaled that interest rates will remain near zero levels through 2014 to encourage consumers to borrow more. |