(The following is the full text of the speech By Usha Thorat, then General Manager, RBI, in honour of Mr.S S Tarapore, on 30 September 1996 during his last day in office)
by Usha Thorat
Respected Deputy Governor,
All the members of the Department External Investments & Operations, Reserve Bank of India, Central Office, Mumbai join me in bidding adieu to you, Sir, on September 30, 1996 as you call it a day after a long and very eventful tenure lasting for more than three decades.
We, in the Department, view the laying down of office by you as the end of an era. When you joined the Reserve Bank of India in the early 1960s leaving a brilliant academic career behind you, the ambience was more serene, the world less complex. As for economics and central banking, the dominant philosophy preferred discretion to rule and conformism to question. The most perverse of all discretionary powers is the ability to keep a hand on the levers of the printing press. And in good measure, the temptation to purvey innovative subventions via the printing press grew. The time for a few simple truths e.g., an economy cannot subsidize itself or it is counterproductive to rely excessively on inflation tax as a source of revenue had just not arrived. Many seemed to believe that it is possible to eat the cake and have it too.
Sir, we can only imagine how you kept your ideas alive and evolving at a time when many tended to wilt. But one gets somewhat closer to having some inkling in this regard when one finds you quote the following from the writings of Fritz. Schumacher in a speech delivered earlier this year:
‘ To everything there is a reason and a time to every purpose under heaven… a time to cast away stones and a time to gather stones together, or, as we might say, a time for expansion and a time for consolidation. And the task of the wise man is to understand the great rhythms of the universe and to gear in with them’
'Your description of exchange guarantee, along with three other quasi-fiscal activities as one of the cardinal sins for a central bank is a case in point. Again, your steadfast advocacy of a strong and transparent balance-sheet for the Reserve Bank of India has introduced a whole new approach to the conduct of monetary and exchange rate policies in this country'
As we have witnessed time and again, your sense of timing has been as brilliant as your capacity to understand and anticipate things. Be it in the matter of fiscal & monetary policies or development of market for internal debt or formulation & execution of exchange rate policy in a market-oriented fashion or adding transparency and clarity to the annual reports of the Reserve Bank of India, you articulated the relevant issues with rare forthrightness and vigour. Your ability to raise and present the same issues from quite different angles, depending on the time and target audience has really been worth noticing. Also, you excelled in synthesizing and bringing many disparate concerns within the same frame of reference. But most importantly, you remained loyal to your long-felt conviction about the do’s and don’ts for a central bank. Your description of exchange guarantee, along with three other quasi-fiscal activities as one of the cardinal sins for a central bank is a case in point. Again, your steadfast advocacy of a strong and transparent balance-sheet for the Reserve Bank of India has introduced a whole new approach to the conduct of monetary and exchange rate policies in this country.
On reserves management, you upheld the prudent and pragmatic view that the objective of investing the reserves is not to earn fancy, volatile and perilous rates of return; rather, the aim is to ensure steady and sustainable accretion to the wealth represented by the reserves through preservation of its intrinsic value. On exchange rate policy, you emphasized the need for a holistic approach as foreign exchange and money markets get intertwined more and more. On the question of human resources development and upgradation of technology, you exhibited a rare vision and foresight. It is a matter of considerable satisfaction for us to observe that the level of knowledge and competence prevailing now in the Department are definitely higher than what was the case even a couple of years back. Much of this quantum leap can be attributed to the encouragement and leadership provided by you in this regard.
In short, you left your stamp of finesse, quality and vision on everything that you did. What was especially amazing to many was your concern not just for the essence or core of the issues but for the details too. Your untiring efforts, backed by indomitable will and skill to integrate divergent aspects of work in the Reserve Bank of India would be remembered for a long time to come. To quote from Schumacher again:
‘To have to grapple with divergent problems tends to be exhausting, worrying and wearisome. Hence, people try to avoid it and run away from it…. Convergent problems require a bit of brainwork, even difficult brainwork, but they do not call for this straining and stretching to a higher level which is the specific challenge of a divergent problem. It is only the latter that are real stuff of life.’
It is our sincere belief that you will continue to deal with real stuff of life in the years ahead. On behalf of my colleagues and on my own behalf, I wish you a very healthy, long, active, and contended life after retirement.
(The article is a copy of the document read out in the department to Mr.S S Tarapore by Mrs. Usha Thorat, then General Manager, RBI, on 30 September 1996 during his last day in office.)
