The Jackson Institute of Global Affairs hosted a discussion Tuesday evening between Yaga Venugopal Reddy, former governor of the Reserve Bank of India, and Rakesh Mohan, former deputy governor of the Reserve Bank of India and professor at the Jackson Institute, about the state of central banking and the Indian economy.
During the talk, which took place in Horchow Hall at 5 p.m., Mohan and Reddy reflected on their own experiences as important players in India’s financial scene. Reddy and Mohan, who led the Reserve Bank of India for many years together, also spoke about their work at the helm of the bank.
But first, the two economists spoke about the beginnings of their long-standing friendship. When both men were low-ranking officials at the Reserve Bank, Mohan said they “had rooms facing each other, and had lunch together for two or three years.” He added that, at the time, neither he nor Reddy dreamed of ending up at the head of the institution. Reddy quipped that not dreaming about the bank is what made them successful.
“If you want very good central banking, take those who are not central bankers,” he said, smiling.
As the discussion shifted toward economic matters, Mohan asked Reddy what the reason was for India’s recent economic slowdown. Reddy attributed the slump to stress on the banking system, the introduction of a goods and services tax and Prime Minister Narendra Modi’s decision to take 500 and 1,000 rupee notes out of circulation. He added that the economy needs time to fully recover from these sudden and sweeping changes.
When a member of the audience asked Reddy whether Modi is deeply involved in making decisions for the bank, both economists said no. Mohan reminded the audience that a change in the governor of the bank has never coincided with a transition between presidential administrations.
“The Reserve Bank of India is independent,” Reddy said. “I’ve taken the finance minister’s permission to tell you that.”
To conclude, Reddy explained that he had originally chosen to get involved in politics because he “would rather be influential than powerful.” While one can lose power quickly, he said, influence is lasting.
Members of the audience peppered Reddy and Mohan with questions throughout the conversation. But the benefits of the discussion seemed to be mutual, as Reddy stated that he, too, learned from the students and their “very insightful questions.”
Student reactions to the event were largely positive. Arifa Alam SOM ’19 said it was interesting to hear the views of economists who had worked within the system for the majority of their lives, and added that she was inspired by “their optimism of changing the system.” And Krish Desai ’21 said he appreciated the opportunity to hear from “two very reputed financial economists” and listen to their views on “international markets, potential fault lines and bubbles.”
The organizer of the discussion, Agnivesh Mishra GRD ’18, shared similar thoughts, saying he enjoyed hearing a “practitioner’s perspective on the developing world.”
Reddy served as governor of the Reserve Bank of India from 2003 to 2008.
Aakshi Chaba | aakshi.chaba@yale.edu