August 05, 2009

It has been little-noticed, little-commented upon. For the first time last week, the senior-most financial policy maker of the country after the Finance Minister put the financial sector in its place.It was the RBI Governor, Dr D. Subbarao, delivering the J.R.D. Tata Memorial lecture at the Associated Chambers of Commerce and Industry.

He was pretty forthright and said, ‘forgotten in the euphoria of financial alchemy is the basic tenet that the financial sector has no standing of its own. It is the real sector that should drive the financial sector. The question we need to answer is whether an existing practice or a change in rule (for the financial sector) delivers higher and more secure real economy growth’.