Former Governor of the Reserve Bank of India (RBI), S Venkitaramanan, who managed the affairs at the central bank when the country faced two major crisis – balance of payment crisis that led to the pledging of gold and the securities scam triggered by Harshad Mehta – in the 1990-92 period passed away on Saturday after a brief illness.
Venkitaramanan, 92, is survived by his two daughters and their families.
He served as Finance Secretary in the Ministry of Finance for a period of four years from 1985 to 1989 when Rajiv Gandhi was the Prime Minister of the country. Venkitaramanan, who had finished his civil service career by 1990, moved on to Karnataka as an adviser to the Governor during President’s rule there, before taking over as the Governor of the Reserve Bank of India in December 1990 — an appointment that came on the back of Rajiv Gandhi’s support whose backing was critical for the survival of the then Chandra Shekhar government.
In the early part of 1991, up to April-May, when the balance of payment crisis deepened — marked by Indian banks even being denied overnight borrowings from abroad, NRIs withdrawing deposits and a downgrade by global credit rating agencies — at the RBI, Venkitaramanan began working on the phone with various central banks.
When these banks wanted collateral or security in the form of physical gold, which had to be transported to the UK, Venkitaramanan managed all of it, including getting the Indian customs not to insist on import clearances or licences for some of the boxes to transport the gold. The rapid depletion of India’s foreign exchange reserves, which by that time, at a little over $1 billion, was enough perhaps to cover just three weeks of imports.
There was the secrecy of operations: the first tranche of the pledged gold (20 tonnes) helped raise $200 million as India went to polls in May 1991 after the tragic assassination of Rajiv Gandhi. Another 47 tonnes of gold raised $400 million and subsequent measures by a new government led by Narasimha Rao marked an end to crisis management and firefighting then.
According to many officials who worked with him during that period, as a crisis manager, Venkitaramanan was brilliant. Some though do say that his pro-growth and pro- industry or corporate stance also could have contributed to the build-up of the economic crisis in the mid to late 80s which he himself had flagged. What they are referring to is the period from 1984 to 1988-89, when the government followed an expansionary policy, which boosted growth but led to the crisis. That was the period when Venkitaramanan was the finance secretary.
The securities scam involving then high-flying broker Harshad Mehta triggered a crisis in the stock markets and the banking system in 1990-91. Investors lost heavily as the stock market plummeted and the badla system was banned.
Where he lost his sheen was after the securities scam of 1992: there was much criticism and he had to go after a two-year term — one of the shortest in the last three decades. His term as the RBI Governor ended on December 21, 1992.
Expressing condolences, RBI Governor Shaktikanta Das said, “very sad to hear about the demise of S Venkitaramanan. He was an outstanding personality and public servant. Made immense contribution during periods of crisis. May his soul rest in ternal peace.”
Many of India’s top politicians, civil servants and economists of that era are unanimous in their opinion that he was perhaps one of the brightest civil servants that the country has seen. Back in Tamil Nadu, where he began his career, he promoted many of the corporations and institutions when he was just a deputy secretary — relatively low down in the pecking order. And that was innovative thinking to ensure that Central government funds were available for the state to spend!
Venkitaramanan was born in Nagercoil, which is now part of Tamil Nadu. He completed his Master’s degree in physics from University College Thiruvananthapuram, Kerala. and also earned a Master’s degree in Industrial Administration from Carnegie Mellon University, Pittsburgh, the USA.