RBI Governor Raghuram Rajan has an outstanding record and the next government must respect his appointment, Finance Minister P Chidambaram said Thursday.
“The Governor…(has) been appointed having regard to his outstanding record, his outstanding academics, his reputation and his work earlier in other organisations. The next government must respect that appointment,” he said at the AICC headquarters.
Chidambaram’s statement was made amid speculation the RBI Governor could be changed if the Narendra Modi-led NDA comes to power after the general elections. The nine-phase election is under way and counting of votes is scheduled on May 16.
Rajan, a career economist, was appointed for a term of three years by the UPA government and assumed charge at the RBI on September 4.
He was earlier the Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago’s Booth School. Between 2003 and 2006, Rajan was Chief Economist and Director of Research at the International Monetary Fund.
Replying to a question about monetary policy, Chidambaram said the RBI must take into account price stability and growth. He said the central bank is now more conscious about this.
On the exchange rate, the Finance Minister said the rupee at a level of 60 to a dollar is an “accurate” valuation of the domestic currency. He said the value of the rupee is determined by the market.
“The correct measure is the REER (real effective exchange rate). As long as the REER is around 100, that reflects more or less the correct value of a currency.
“We think that rupee at about 60 to a dollar, given the REER, is more or less an accurate reflection of the true value of the currency,” he said.