The RBI which was first set-up in April 1935 under British rule is not statutorily independent. But, it has enjoyed a high degree of autonomy in the last few years and Governor Dr Subbarao has successfully resisted pressure from New Delhi to ease policy. Senior bureaucrats in the Finance Ministry in Delhi believe the degree of autonomy may partly be due to the fact that the current Prime Minister, Dr Manmohan Singh, was himself a Governor of the RBI (from September 1982 to January 1985). And better appreciates the challenges and need for autonomy felt by a Governor of the RBI.

PM Dr Singh yesterday announced a cabinet shuffle, most likely the last one before the 2014 General elections. Key portfolios including oil, foreign affairs, railways, human resources and justice saw ministerial changes. A glaring absence from entry was Mr Rahul Gandhi, 42, scion of the Nehru-Gandhi dynasty that has governed India for much of the 65 years since independence from Britain in August 1947. He has been an MP since 2004 and is General Secretary of the Congress Party, of which his mother is President.

David Fuller's view The RBI has reasserted its autonomy after calls by Finance Minister Chidambaram to lower rates today. While this will disappoint a Congress government trying to make up for lost time, an independently-minded central bank is probably good for India over the longer term.

Prime Minister Singh's extensive cabinet shuffle is a clear indication that he intends to energise his government further in an effort to maintain the pace of recent reforms. (See comments on the technical outlook for India's stock market in the chart review section above.)