For some time after the infamous US economic collapse (and its still continuing) and the resulting collapse of banks and hedge funds in Europe, some people have been loudly wondering why has India’s economy been largely impervious to these major shocks? If you are wondering why India matters, well almost all of the MNC banks have (or posthumously had) huge business stakes in India and have (or had) invested heavily in Indian markets.

Many point to one man whom they think as the savior of the Indian economy through this current global gloom. Mr. Reddy, the former governor of Reserve Bank of India a.k.a RBI, the regulating authority in Indian markets and the country’s economy.

In a very beautiful article by Joe Nocera in the New York Times, he points out how Mr. Reddy foresaw the bubble-burst in the housing market in the US and how it would affect India’s economy. Seen by critics as unfair regulatory measures at the time, Mr. Reddy made some tough rules as to whom Indian banks could lend money. Unlike US banks who lent money to people with bad credit history or individuals who would be unable to make future payments, cut offs for Indian banks lending money was tightened.

In an exclusive interview to NDTV, an Indian based news channel, Nobel economist Joseph Stiglitz showers high praise on Mr. Reddy saying, “If we had Governor Reddy, we wouldn’t be in such a mess”. ‘We’ being the American economy here.

Many see Mr. Reddy’s policies as anti-Greenspan. Alan Greenspan, former Chairman of the Federal Reserve and whom many now blame for having shepherded the American economy to this current state because he didn’t see what was coming or willfully chose to ignore the signs.

Supporters of free market and no-regulation in American markets are slowly toning down on their rhetoric as they realize such examples of where proper and timely regulation (example, Indian economy) has prevented chaos and volatility. Mr. Nocera suggests that maybe economists in US can take a page from Mr. Reddy’s book the next time.

It is indeed such a proud moment for Indian economy that we have such a brilliant man amidst us. We fervently hope that the Government will continue to use such talents and not forget them after the media hype has died down, like what they did with Mr. Amartya Sen after he won the Nobel Prize.

(On the left, image of the now defunct Lehman Brothers building in NewYork City).