Guess who has been the best governor at the RBI?

As the RBI governor, Bimal Jalan didn't have a single Congress government to deal with.

For the last six months, thanks to the intellectual generosity of Shashanka Bhide, director of the Madras Institute of Development Studies, I have been writing a monograph on the history of monetary institutions, that is, the Reserve Bank of India (RBI).

It is my own interpretation of it. All of it is from published sources. No secrets, to some of which I have been privy, are being divulged. So the RBI need not worry.

In any case it has none that is worth keeping. Amongst other things, I have found that the RBI tends to eulogise each of its governors.

With the exception perhaps of K R Puri, who was appointed during the Emergency, all governors are treated as deities of the Hindu pantheon.

(A non-Hindu, by the way, is yet to be appointed after 1937. That non-Hindu was an Englishman.)

Before the reforms of 1991, RBI governors were not held up to public scrutiny.

They did their work quietly and no one much cared.

Nor did anyone bother to ask if they had been successful.

But that changed in 1991. The media and its successful manipulation by the post-1991 governors under the guise of 'communicating with the markets' have been largely responsible for this. Before 1991, the governors avoided the media and vice versa.

It is quite the opposite now, with a constant holding of hands and a fluttering of eyelashes. As a consultant to the RBI, I, too, have played the game - for quite a long time, in fact - and I must say it was fun.

Mirror, mirror on the wall... So how do you evaluate an RBI governor? What criteria should be used?

Broadly, as a good leader, or as a very successful follower?

S Venkitaramanan, the man who was governor during the transition, has been largely forgotten even though it was he who saved India from the ignominy of debt default during that critical phase between December 1990 and July 1991.

The RBI has his recollections - as well as that of about 40 others - in audio, video, and transcript form at its archives in Pune.

It should bring them out as monographs.

That could be yet another lasting contribution of Raghuram Rajan, the current governor.

C Rangarajan (1992-97) was an RBI insider. He had been deputy governor since 1982 and, as governor, he supervised the first phase of financial sector reforms.

He got along with his minister, Manmohan Singh, who had been his governor from 1982-85.

He did a great job of setting up new systems. Bimal Jalan (1997-2003) was a leader. He was extremely innovative and cool-headed and did many new things both on the policy side and the administrative side inside the RBI. He steered India through the Asian crisis of 1998 and then through the dollar flood that started in 2002.

He, too, got along very well with his ministers, Yashwant Sinha and Jaswant Singh, both of whom left him alone to do his job, unlike Congress ministers, who constantly interfere.

There were two governors in the next 10 years - Y V Reddy (2003-08) and D Subbarao.

Both had to manage completely unaccustomed turbulence, first of a growing economy, then of inflation and the aftermath of the 2008 financial crisis. But both ran into difficulties with their ministers for the good advice they gave and for the resistance they put up to bad ones.

And now we have Raghuram Rajan. He is trying to give the RBI a new role and direction in the management of the economy. Pir, bawarchi, bhisti, khar

The RBI governor is called upon, as the saying goes, to be a pir (sage), bawarchi (cook), bhisti (water carrier) and khar (donkey).

Roughly, the pir's role is to give cautionary advice to the government. The bawarchi's role is the innovation/supervisory/regulatory one.

The bhishti's role is to do all the dirty work and smoothen the way in the financial sector.

And the khar's role is where the governor, like a beast of burden, carries the load for every single mistake the finance minister makes.

So it becomes hard to judge which role he - no she so far - has discharged best because it is impossible for the governor to maximise the outcomes on each count.

He is basically dancing to four different tunes from the same master, sometimes simultaneously.

From a national point of view, inflation is the biggest threat posed by finance ministers. Before every election, they take a huge fiscal dump and it is the governor, who has to clean up after them.

On that reckoning, Bimal Jalan has performed the best again. Guess why? He didn't have a single Congress government to deal with.