Raghuram Rajan put an end to all the speculation around the continuation of his second term with his letter to his staff (that was made public). He announced his retreat to being a Professor in the University of Chicago. In his letter, he gave a strong hint of his relationship with the Government and how that might have affected his decision to discontinue being the Governor of RBI.
He says, “While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016. I will, of course, always be available to serve my country when needed.”
There have been various instances of disagreements (and quite public) in the recent past between the Government and the RBI Governor. Moreover, Subramanium Swamy in his letters to the Prime Minister has been very vocal about how Rajan’s policies are a deliberate attempt to “wreck the Indian economy”.
Everyone is replaceable. But that doesn’t mean they have to be replaced.
Rajan is indeed an asset to the nation. A very well respected man and one of the few who ‘predicted’ the 2008 crisis. In his favour, it is said that he is to be credited largely for keeping inflation under control by keeping interest rates high, not something the Government might have favoured. Swamy refutes this method by calling it “disastrous” for the economy.
He says this has been detrimental to small and medium businesses and escalated unemployment. Moreover, the low inflation has been attributed to a massive drop in oil prices (from US$ 90 a barrel to US$ 40 a barrel) and commodity prices.
“I cannot see why someone appointed by the UPA Government who is apparently working against Indian economic interests should be kept in this post when we have so many nationalist minded experts available in this country for the RBI Governorship”, Swamy exclaims.
He says that Rajan is a product of the West and ‘mentally not Indian’. The Government might not validate or side with Swamy’s claims, but the way the issue has been politicized, clearly makes the Government look bad. Not that it did any good worth mentioning!
Interestingly, Rajan enjoys a very uncanny fan following. Whatever the dispute is, there is a peculiar favouritism attached to him. Although he is a qualified man who served as the chief economist at the IMF before being the Governor of RBI but the support lent to him is more emotional than based on hard facts. He is a man of intellect who has very prestigious laurels in his account and one of the finest brains in Economics.
Therefore, the entire scenario with the Government’s stance, Swamy’s attacks and the final nail in the coffin being this letter put forth a very bad picture of the Centre.
Both the sides hold certain strong opinions to justify their stance with facts and figures. But they government’s way of handling the issue has totally backfired.
Who is at loss here?
Rajan? Absolutely not! A man of his stature and intellect has no dearth of opportunities ahead of him. Who knows he might become the next head of IMF, succeeding Christine Lagarde, as suggested in 2014!
But the Government might have hit their wicket themselves. Even though they claim no involvement in the matter and respect his decision and publicly wish well for him (Yeah Right!), they cannot disassociate from Swamy, his letters to the Prime Minister and Rajan’s statements about the Centre and his relationship with them. But I anticipate the worse to happen still. We do not know who might succeed Raghuram Rajan.
And given that the Centre is now known for messing around with the appointments of prestigious institutions.
When a C-grade Director can be made the Chief of CBFC,
A failed actor with barely any cinematic laurels to his credit can be made the Chief of FTII,
And The cherry on top being the recent appointment of a former cricketer as the Chairman of NIFT who has as much knowledge about fashion as a horse!
Then God Bless the post of RBI Governor!
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Views presented in the article are those of the author and not of ED.