Bringing their differences into open, outgoing Reserve Bank of India (RBI) Governor D Subbarao on Thursday, in his last speech, took a dig at Finance Minister P. Chidambaram for his old comment that he would "walk alone" to ensure economic growth in the face of tight monetary policy of the central bank.
A week before he demits office, Subbarao referred to a lot of media coverage on policy differences between the government and the Reserve Bank and the issue of autonomy and accountability.
"Gerard Schroeder, the former German Chancellor, once said, 'I am often frustrated by the Bundesbank. But thank God, it exists.'
"I do hope Finance Minister Chidambaram will one day say, 'I am often frustrated by the Reserve Bank, so frustrated that I want to go for a walk, even if I have to walk alone. But thank God, the Reserve Bank exists'," Subbarao said in his last public lecture as RBI Governor.
He was obviously referring to a statement of Chidambaram in October last year that "if the government has to walk alone to face the challenge of growth then, 'we will walk alone'."
Chidambaram was then upset over RBI's decision to keep the interest rates high despite government unveiling a five-year fiscal consolidation road map.
FM says he had said the same as Subbarao on economic woes
Finance Minister P Chidambaram today reacted to RBI Governor D Subbarao's comments on the reasons for the current economic woes, saying this is what he had said a couple of days ago.
"This is no different from what I said day before yesterday," he told reporters here when asked to comment on Subbarao's criticism of government policies leading to a slowdown in the economy.
Subbarao blamed the "loose fiscal stance of government during 2009-12" for slow growth and high inflation.
"Had the fiscal consolidation been faster, it is possible that monetary policy calibration could have been less tight," he said in his last public lecture as RBI Governor.
Speaking in Parliament on Tuesday, Chidambaram attributed the current woes not just to external factors, but to domestic factors allowing the fiscal deficit to be breached and the current account deficit to swell because of decisions taken during 2009-2011, a period when Pranab Mukherjee was the Finance Minister.