MUMBAI: In his swansong, Reserve Bank of India Governor Duvvuri Subbarao laid bare his differences with Finance Minister P Chidambaram, but predicted that one day the lawyer-turned-politician will thank the bureaucrat.

Government meddling in the affairs of the central bank should be avoided and the RBI governor should appear before a parliamentary panel twice a year, as is the case in advanced nations, to ensure the autonomy comes with accountability, Subbarao said. “I do hope Finance Minister Chidambaram will one day say, ‘I am often frustrated by the Reserve Bank, so frustrated that I want to go for a walk, even if I have to walk alone. But thank God, the Reserve Bank exists’,” Subbarao told the audience at the Nani Palkhivala Memorial Lecture on Thursday evening.The RBI governor also received support from Deepak Parekh, one of the most respected voices in the Indian financial sector. The HDFC chairman told ET NOW that Subbarao had done his job to the best of his abilities and it was unfair to criticise him.Significantly, the outgoing governor, who took over as the Lehman Brothers crisis was breaking, said it would be misleading to lay the blame for the latest currency crisis at the doors of the US Federal Reserve since part of the problem is self-inflicted.The recent rupee fall, the governor said, was more because of the high current account deficit (CAD) — the excess of spending overseas than earnings — for three years. As a nation, India failed to utilise the excess liquidity to set its house in order, and blaming the Fed Reserve now would not help.“Had we used the breathing time that this gave us to address the structural factors and brought the CAD down to its sustainable level, we would have been able to withstand the ‘taper’,” Subbarao said.“In the event, we did not. We, therefore, made ourselves vulnerable to sudden stop and exit of capital flows driven by global sentiment; the eventual cost of adjustment too went up sharply,” he added.The Indian rupee is among the worst-performing currencies in Asia this year, losing as much as a quarter of its value from the peak this year. The fall has been attributed to the Fed tapering its $85 billiona-month bond purchases that had flooded global markets with liquidity. On Thursday, the rupee recovered due to some measures taken by RBI.Last October, Chidambaram had famously told ET, “If the government has to walk alone to face the challenge of growth, then we will walk alone”. The FM made these remarks in the context of RBI’s seeming reluctance to cut rates.Although the governor and the minister have spoken in conflicting language when it comes to economic policies, Subbarao is for the first time publicly naming the minister to assert that his frustration with monetary policies may well turn out to be wrong in the eyes of history.Digging into his five years at the helm of the central bank, Subbarao was candid in admitting that there were some flaws in his readings and actions, but said much of the economic ills were due to governance failure rather than tight monetary policy.“Yes, growth has moderated. But to attribute all of that moderation to tight monetary policy would be inaccurate, unfair, and importantly, misleading as a policy lesson,” said Subbarao.“India’s economic activity slowed owing to a host of supply-side constraints and governance issues, clearly beyond the purview of the Reserve Bank.” Subbarao’s rebuke comes in response to criticism that his insistence on high interest rates precipitated a crisis that led to economic expansion plunging to a decadelow of 5%, from more than 9% a few years ago.The governor, who has steadfastly held that the central bank’s autonomy needs to be preserved and that the role of such authorities is increasing across the world after the 2008 crisis, also said that government meddling should be avoided.“An autonomous and apolitical central bank is a delicate arrangement too, and will work only if the government respects the autonomy of the central bank, and the central bank itself stays within its mandate, delivers on that mandate and renders accountability for the outcomes of its policies and actions,” he said.Subbarao said the government should mind its business of governing and leave the markets to regulators, unless there is a crisis. “In the matter of ensuring financial stability, the government must normally leave the responsibility to the regulators, assuming an activist role only in times of crisis,” he said.