MUMBAI, Nov 7: At 3 in the afternoon, finance minister P Chidambaram announced the appointment of Bimal Jalan as the next RBI governor. Rangarajan will hang his boots up even before his term expires on December 22.

Though financial circles were caught offguard by the move, it's business as usual in RBI's corridors. On Saturday, Rangarajan will hold a meeting with state finance secretaries to review the existing mechanism of market borrowings.

Next week, he will be in Colombo to deliver the keynote address at a seminar of south Asian foreign exchange dealers' body. The governor himself, however, remains unfazed by the recent developments. In an exclusive interview with The Financial Express on Friday, Chakravarty Rangarajan, one of the chief architects of the financial sector reforms, speaks about his past and future with a fair amount of stoicism. Here are excerpts from the interview:

Are you happy with your new assignment?

I had a full term of five years and this path of my career has to come to an end at some point (of time). There will always be some more work to be done but that cannot determine how long one should continue. One always has the feeling that one could do more or one could have done better but, by and large, I have a sense of satisfaction, of having been able to make some important changes (in the financial sector).

How do you reconcile these two roles - that of the governor of the country's central bank targeting money supply and containing inflation and the governor of a state, which is essentially a political appointment?

One performs different roles in different stages of one's life. Being the constitutional head of a state is also an important function and one has to contribute to the development of a state, within the limits of the role of a governor as defined in the Constitution, as much as one can. It is also an important assignment and can be satisfying.

When do you plan to take over the new assignment?

It could be in the next ten days. We will fulfill all the obligations or engagements that we are committed to.

Would you concentrate on financial sector reforms in states now?

Whatever advice one can give from the position one holds is important. I mean, basically, because of one's experience one can offer certain advice in certain areas.

Given a choice, would you have opted for some other assignment?

I think one should be able to make a contribution in whatever office one holds.

Does the appointment of Bimal Jalan signify continuation of the government's policy in regard to financial sector reforms?

Well, he is a distinguished economist and he has dealt with financial matters. At one time, he was a special secretary in charge of banking. He comes with the right background. There will be continuity of policy and policy will also respond to changing circumstances.

How do you look back at your tenure?

Broadly speaking, there are two areas which can be mentioned - monetary policy and financial sector reforms.

There has been an attempt to give a definitive stance to monetary policy. I think the monetary policy has acquired a certain character during this period.

I think the moderation in inflation rates, that we have seen in recent times, is an indication of the success of the policy that we have been pursuing. The second area in which we had tried to give a new direction has been the financial sector reforms. I do not want to go into details, but I think these are the two areas which one must mention.

What is the single-most important achievement?

It is very difficult to talk about the single-most important achievement... I think achievements must be certified by others and not by myself. What I would like to say is that one has tried to give the monetary policy a certian character, and that I think is the most important (achievement).

Tell us something about the unfinished agenda.

Well, I think the economic policy making is a continuous process. The policy will have to respond to circumstances. But, I think in the case of financial sector reforms, definitely the second phase must emphasise on organisational effectiveness of banks and insitutions. The first phase created the appropriate policy environment for improved performance of banks and financial institutions. In the second phase initiative will have to come from banks and financial institutions themselves.

Are you satisfied with the central bank's autonomy?

Well, I think a significant achievement during this period has been the institutional arrangement worked out between the Reserve Bank of India and centre so that the central bank may be in a position to conduct a more independent monetary policy. This is a very important milestone in the evolution of monetary policy in the country.

What is your agenda as the governor of Andhra Pradesh?

I do not think as a constitutional head of a state, one should have a specific agenda. All that I said is that one has certain experience, one has certain expertise and it can be made use of within the limits of the (new) role.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.