Five Years of Leading the Reserve Bank: Looking Ahead by Looking Back

This Tenth Nani A. Palkhivala Memorial lecture lecture centres around the role and responsibility of a central bank in a democratic structure. Central banks make macroeconomic policy that influences the everyday life of people; yet they are managed by unelected officials appointed by the government. Such an arrangement is deliberate, based on the logic that an apolitical central bank, operating autonomously within a statutorily prescribed mandate and with a longer time perspective, is an effective counterpoise to a democratically elected government which typically operates with a political mandate within the time horizon of an electoral cycle. An autonomous and apolitical central bank is a delicate arrangement too, and will work only if the government respects the autonomy of the central bank, and the central bank itself stays within its mandate, delivers on that mandate and renders accountability for the outcomes of its policies and actions. Putting the three elements of this lecture context together --- Shri Palkhivala’s exemplary commitment to preserve and promote values and institutions of democracy in India; the Reserve Bank’s role in the democratic edifice of India; and the completion of the speaker's term as the Governor of the Reserve Bank - the lecture focuses on a topic that threads together these three elements.