The image of a central banker is of a doughty, serious-faced individual, a bit of a grouch perhaps. He is ready with a frown and words of caution. Savak Sohrab Tara pore, one of India’s most outstanding central bankers, who passed away this week, was anything but.He always had a cheerful twinkle in his eyes. A romantic at heart (in the classical sense), he could quote Shakespeare and Aristotle as easily as Keynes–and even Wodehouse. A gentleman to the core, he was the epitome of grace and dignity. His integrity was beyond measure. On the last day of his job at the Reserve Bank of India he chose to take a cab home, instead of the official car.
He retired as deputy governor in 1996, but continued yeoman service to the central bank, and to the public at large with his writings and lectures, till his dying day. He touched many lives personally, as a mentor and guide, as a career counsellor, and as a friend. One of the great tributes to him came from former governor of the RBI Dr Y V Reddy, who said, “I have lost one of my best friends, philosopher and guru“. Coming from a governor, who has been celebrated globally for having saved India from the global financial crisis of 2008, it is no small tribute.
Tarapore joined the RBI in 1961 and retired in 1996, and was then almost immediately appointed to head a committee on capital account convertibility. His committee report and recommendations came out just at the East Asian currency crisis blew up in June 1997. It hugely damaged economies like Thailand that had an open capital account. He was of the firm view that India should open its capital account gradually, and only after ensuring low inflation, low fiscal deficit, and low incidence of bad loans. Mind you, this was at a time when there was immense pressure from the IMF and the `Washington Consensus’ for India to open its capital account completely.
In the aftermath of the Asian crisis of 1997 it looked foolish to tread recklessly into convertibility. Twenty years later, after the 2008 crisis, the IMF has itself changed its tuneadvocating the wisdom of caution and keeping some capital controls. This was Tarapore’s intuition and in sight long ago, and he has been amply vindicated, but not acknowledged.
His thinking influenced many governors dating back to the days he was an executive director in the RBI. Since he never became governor himself, he was the classic second fiddle, an unsung hero who remains in the background. But with true modesty, he was the first to admit that a second fiddle didn’t have to take it on the chin, the way the RBI governor often has to.
He firmly believed in the autonomy of the RBI, and believed that its independence is very critical in ensuring low inflation. He was instrumental along with governor C Rangarajan in the early 1990’s in removing the `automatic monetisation’ of the fiscal deficit.
Prior to this, whenever the union budget had a deficit (almost always), the government depended on the RBI to simply `print more money’, thereby jeopardising inflation control, and fiscal prudence.
This space is too short to recount Tarapore’s invaluable contribution to banking, monetary policy, and indeed the nation. In the past twenty years he batted relentlessly for the common man, be it the need for higher deposit rates, or better service from banks, or more transparency on bank charges.
Despite having held the post of deputy governor, he didn’t hesitate to stand in line like a commoner at his local bank branch. So his compassion came from first-hand experience.
If the RBI is recognised as one of the finest institutions of modern India, it is in no small measure because of the contribution of unsung heroes such as Tarapore. May he rest in peace, and may we strive to uphold his legacy and live his values.