The Book Clash of Titans: Reimagining Subbarao and Chidambaram

Dear Reader,

Hi! Ever since Dr. Subbarao published his memoirs, Mr. Chidambaram has lost his sleep. This piece was published under my column “Tweakonomics” in the Hindu Business Line today. You can see it at; else read it here directly. Enjoy!


It’s memoir time, much to the horror of the UPA in general, and P Chidambaram in particular. D Subbarao, the ex-Governor of the RBI, the original inflation-warrior of India is back, and how! In his book Who Moved My Interest Rates, Subbarao gives a dekko into the strange undercurrents between the Government and the RBI.

Faced with back-to-back droughts, high inflation figures, a scam-ridden coalition Government unable to take decisions and a global crisis, this RBI Governor was known not only for keeping the interest rates high, but also for sticking to his stance unfailingly.

Students of macroeconomics are often taught the IS-LM model, with the IS curve representing the fiscal side of the economy and the LM curve representing the monetary side. But, never have the IS and the LM curves cut each other so sharply, as in the time of the great Subbarao-Chidambaram tussle. The Government was worried about growth, and the RBI, about inflation. Repo rates were high, tempers, higher. Chidamabaram was red with anger. Subbarao shrugged calmly, and raised the rates some more.

Back in the rum old days of the global crisis, Chetan Bhagat was not yet decided whether to become an environmentalist, feminist or a plain economist. But the Subba story inspired him. Looking at some of those super high repo rates in the 8 per cent range, Bhagat decided to go the economist way. He had then offered to write Subbarao’s biography, Eight Point Someone. Subbarao considered the offer with his usual calm countenance, shrugged, and increased the rates promptly.

But this time, despite upping the rates, he was not very calm inside. The writer’s bug had caught him. Bhagat’s offer had stuck to his mind. “But I’ll be damned if I allow this man to write A Fort-Night at the RBI for me. Nah, I’ll write all of this myself! And God knows, there’s enough material here to create an encyclopedia! An entire Chamber of Secrets to be opened. Pride and Prejudice, unlimited. Malice in Wonderland. Oh, I’ll be the definitive Interpreter of Maladies. And to write the Lion, the Witch and the Wardrobe full of skeletons will be so much fun!” His thoughts complete, he was at peace. And he Atlas(t) Shrugged, and raised the rates some more.

He initially had thought of writing the 7 Habits of Effective Central Bankers. It would be a simple book with only one page:

Keep interest rates high.

Keep interest rates high.

Keep interest rates high.

Keep interest rates high.

Keep interest rates high.

Keep interest rates high.

Keep interest rates high.

Even as Subbarao was contemplating the title of his book, Chidambaram started reading The Game of Thrones. He was thrilled by the cutting dialogues, and feeling clever, called up Subbarao. “Inflation is so terribly final, while growth is full of possibilities.” But he had underestimated Subba. The RBI Governor simply said, “Spoke to Modi yesterday. Winter is coming.”

Chidambaram, enraged, tried the Scarlett O-Hara track, “Sir,” he cried, “You are no gentleman! You will be Gone with the Wind!”

Subbarao commented, “Frankly, my dear, I don’t give a damn.”

Chidambaram, ever the wily lawyer, changed tracks to Iron Man. “What’s the point of owning a race car if you can’t drive it?”

But this is Subbarao we talk about. He simply shrugged (Chidambaram turned white) and said quietly, “Jarvis, do me a favour and increase the rates some more.”


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