The politicisation of RBI Governor, Raghuram Rajan’s “exit”, shows that this government brooks no dissent. There is less dignity on the part of the government, more of controversy.
It is rare and disturbing that the RBI Governor can be called “mentally not fit Indian”.
The government’s pretension that Subramanyam Swamy’s labour against Rajan was his “personal opinion,” doesn’t augur well. Has the government used Swamy to do a foray against a celebrated central banker? Whenever you see success, envy can’t be far behind. Swamy expressed his jealousy with the name-calling not fit even for a petty trader. Arun Jaitley conveniently swallowed it.
While Rajan will continue to win laurels by enduring his “academic” career, it is Modi government’s credibility that gets tainted. The government’s failure to retain Rajan will be seen as its non-approval of his policy against inflation and huge NPAs of the banking sector. This will be the first time in over a couple of decades that the central bank gubernatorial post will miss the second term.
No one can question Rajan’s achievements during his three-year tenure. In his note to the RBI staff, he has reflected that his effort on inflation and bad loans are “unfinished.” Can it be speculated that Rajan’s exit is the victory of crony capitalism? Or, is it that, being a government employee, one cannot ignore government’s views?
When he stepped in September 2013, inflation was heading north, the rupee was in free fall, and was ready to perform the surgery. The apex bank chief successfully brought down the retail inflation from 9.8 per cent in 2013 to 3.78 per cent in 2015, the lowest since 1990s. He was able to “lure inflows of about USD 34 billion through foreign-currency swaps,” helping lift the rupee from a record low. He brought out the NPA-muck in the open. The cleaning act should fix the politician-banker-bureaucrat nexus, as the PSBs are the primary source of crony capitalism.
Even while serving as the youngest IMF economist from 2003-2006, Rajan had predicted the 2008-crisis much ahead of time that would lead to the “Recession”. No wonder, Times Magazine 2016 list, featured RBI Governor Raghuram Rajan among “100 most influential people in the world”. Sometime back, Rajan had said, “No one wants to go after the rich and well-connected wrong-doer, which means they get away with even more.” Doesn’t it merit a serious view?
A word for the Opposition: While Congress did not give second term to Dr. Abdul Kalam, why is P. Chidambaram shedding tears over Rajan?
Though, a school of thought believed that “no one is indispensable.” In history, very few are being remembered like, say, Dr. Abdul Kalam or T.N. Seshan. If the government appoints someone who will loosen things, the stock market may cheer as a result but the poor and middle class will suffer most due to inflation. Reduced interest rates beyond a certain point would hurt the senior citizens, as the new person will print more money.
While there may be no dearth of talents to replace Rajan as RBI governor, the moot question is how much freedom the successor will have? Dr. Raghuram G. Rajan’s re-entry into “academia” might make posterity better off. Don’t forget, Rajan earned his place!
(The views expressed by the author in the article are his/her own.)