Reserve Bank of India (RBI) governor D Subbarao has been given a two-year extension, ending weeks of speculation about a change at the top in India's central bank amid increased uncertainties in the world economy.
"It (extension) will be good because at this point of time, extension of the RBI Governor is needed. Though there was time till September, we decided (that) we should do it quickly to ensure that there is no uncertainty," finance minister Pranab Mukhjerjee said.
Subbarao is not the first serving governor to get an extension. While his predecessor YV Reddy was given a five-year term at the outset, Reddy's predecessor Bimal Jalan, who served for six years, received an extension as did C Rangarajan, who was governor before Jalan, for five years.
"He (Subbarao) is (a) doing good job and he has already earned his reputation as central bank governor in the various deliberations of the G-20, where finance ministers and central bank governors meet and take decisions," Mukherjee said.
Subbarao's tenure has been marked by policymakers' dilemma of balancing growth with price stability.
Subbarao is an IIT-educated career civil servant who will turn 62 on Thursday. He took over as the RBI governor on September 5 in 2008, barely 10 days before the collapse of Lehman Brothers triggered a credit crisis that pushed the world economy into a tailspin.
This forced the RBI to slash interest rates as authorities across the world announced a string of monetary and fiscal measures.
The latter part of his term has been marked a harsh dilemma: a slew of fiscal and monetary measures to curb inflation has not tamed prices but yet cast side adverse side-effects on growth.
Subbarao, who joined the Indian Administrative Service (IAS) in 1972 and was finance secretary before assuming charge as the central bank governor, has presided over decisions to raise the policy signal (repo) rate 11 times in the last 16 months to cool prices that seems to be heading towards double digits.
A higher repo raises banks' borrowing costs, which in turn would raise interest rate on final home, auto and corporate loans.Subbarao, who has studied at the Indian Institute of Technology, Kharagpur, and the Massachusetts Institute of Technology (MIT), has also ushered in key reform measures including savings bank rate deregulation.