This morning, S. Venkitaramanan, a seasoned Indian Administrative Service bureaucrat and former Governor of the Reserve Bank of India (RBI), passed away at the age of 92 due to illness. Recognized for his decisive decision-making, Venkitaramanan played a crucial role in navigating and resolving significant crises during his extensive service in the government and as a central banker.
Venkitaramanan served as the Governor of the RBI from December 1990 to December 1992, a period marked by India’s severe economic crisis that necessitated comprehensive reforms at both the governmental and financial system levels.
Key Contributions and Crisis Management:
During his tenure, India faced a severe economic crisis, prompting sweeping reforms to address external imbalances and promote competitiveness in exports. Notably, under Venkitaramanan’s leadership, the RBI devalued the currency, marking a pivotal move to stabilize the situation.
The devaluation was followed by a series of reforms, including the introduction of the Liberalised Exchange Rate Management System (LERMS), aimed at liberalizing the exchange rate mechanism. Venkitaramanan’s approach to crisis management involved proactive measures, including the discreet initiation of technical work on disaster management, ensuring preparedness for potential uncontrollable situations.
Legacy in Financial Reforms:
Venkitaramanan’s legacy extends beyond crisis management to financial reforms. During his tenure, baby steps were taken in reforming money markets, such as the introduction of money market mutual funds by banks and widening participation by institutions like IDBI and NABARD. Additionally, auctions for 364-day Treasury Bills were conducted without RBI support for the first time.
However, his tenure also saw challenges, including the 1992 stock market scandal, where brokers were accused of manipulating the government bond market. The aftermath of the scandal led to a cautious approach in reforming the bond market for over a decade.
Tributes and Recognitions:
Colleagues and successors have praised Venkitaramanan’s extraordinary leadership during the balance of payments crisis. Dr. Y.V. Reddy, a former RBI Governor, emphasized Venkitaramanan’s pivotal role in managing the crisis and credited him with significant achievements in the realm of financial reforms.
S. Venkitaramanan’s contributions have left an indelible mark on India’s economic and financial landscape, making him a respected figure in the country’s history.