No other central bank governor in India has had a cult following as the suave Raghuram Govinda Rajan, who returned to India after his stints in the International Monetary Fund and Chicago University.
On 4 September 2013, the 50 year-old Rajan became one of India’s youngest central bank governor taking over from Duvuuri Subbarao. On his first day, Rajan made his arrival known to the world saying some of his actions wouldn’t be popular and the Governor’s job isn’t for Facebook likes for him.
Since then, Rajan has attracted eyeballs not just for his central banking acumen, but also for his good looks and witty one-liners such as ‘ I am Rajan and I do what I do’. His fan club has grown more in number since then. Rajan has been featured in at least two women’s magazines.
If Rajan’s popularity factors were his stature as a world-renowned economist and a reformist central banker earlier, of late, the reason why he is discussed in the Indian media is primarily due to the work of one man–BJP’s maverick leader and, an MP, Subramanian Swamy. Swamy has unleashed a tirade on Rajan for all possible reasons.
Interestingly, when Rajan took office, his father, R Govindarajan, a former diplomat had said, “Lifting someone too high… the drop can also be sharp. But, he’s got a sound head and won’t be carried away; he knows what he’s capable of and he’s already said that he doesn’t have a magic wand.” As Rajan’s three year tenure is coming to an end, his father’s words seem to have a prophetic ring to it.
Swamy and Rajan have a few common factors– both of them Tamilians, economists and academicians at some points in well-known institutions. But, that’s where the similarity ends. Swamy is remembered and recalled for his acerbic words against the Gandhis, Jayalalitha, Chidambaram and a host of others, and Rajan for his measured words and his unusual silence on Swamy’s personal attacks.
One can only sympathise with someone who is on the wrong side of Swamy. Gandhis are a good example. Swamy is angry, persistent and often uncontrollable in public outbursts against his enemies. But, many feel that this time he chose a wrong target who has confined himself largely as a careerist.
Swam’s first salvo on Rajan was on May 12 in a letter to Prime Minister Narendra Modi demanding sacking of Rajan. “The RBI governor is wilfully and deliberately wrecking the Indian economy. He is mentally not fully Indian.”
Swamy should be credited with coining a new phrase, `mentally not fully Indian’. All hell broke loose among foreign investors, industrialists and economists who have placed Rajan as a critical credibility factor as far as the Indian economy is concerned.
Swamy contended that Rajan is not fully mentally Indian since he holds a US Green Card and makes occassional visits to that country. That definition surprised many who asked whether Swamy’s definition of ‘fully Indian’ includes someone who does not travel abroad, does not teach or work in any foreign college or office and in addition to that only wears Indian clothes such as dhoti, kurta and the Gandhi cap?
Swamy then took a step further. He cast aspersions on the governor’s capabilities in handling the monetary policy. “In my opinion, the RBI Governor is not appropriate for the country. I don’t want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country. His actions have led to collapse of industry and rise of unemployment in the economy. The sooner he is sent back to Chicago, the better it would be.”
Rajan’s name was then linked to the crisis in Japan and East Asia which, according to Swamy has given US more power in the region. “This seems now also the modus operandi of Dr Rajan in his strangulating the small and medium industries by untenable high interest rates”. But interest rates for SMEs have always been high to their discomfort in India. It was not a creation of Rajan.
Not all the muck that Swamy threw on Rajan stuck and ministers from the NDA came to Rajan’s defense thus putting Swamy on a weak wicket. “I don’t approve of personal comments against anyone, let alone the RBI Governor,” Union Finance Minister Arun Jaitley said when he was asked whether Swamy’s tirade against Rajan had the government’s support. This opinion was shared by party President, Amit Shah. Even Modi preferred to stay away from the controversy saying Rajan’s reappointment is an administrative issue and will be addressed in September, when his period ends. It shouldn’t be of media’s interest. Modi said.
Meanwhile, supports grew in the Rajan camp.
Mohandas Pai, the former Chief Financial Officer, HR Head and Board member of Infosys said cronies are behind the efforts to oust Rajan. “Market sources are saying that vested interests and cronies who have been forced to pay back their loans by banks are instigating all this against Rajan,” Pai said.
Not just Pai. Godrej group chairman, Adi Godrej, too spoke in support of Rajan. “I think he has done a good job. He is very well respected across the world. He is a very capable person, very well respected person and I think if his term is extended, then its a good thing for India,” PTI quoted Godrej as saying. “Rajan was voted as best Central Bank Governor in the world by one of the magazines. I am admirer of him and I support his extension,” Godrej said.
The Swamy-Rajan saga continues and isn’t likely to die down in the media till either the government or Rajan say a final word on his continuation after the end of his first term. True, Rajan isn’t indispensable for India, but in a scenario where the world doubts India’s growth claims and for an aspiring economy, where financial stability is more critical than headline growth numbers, Rajan matters.
Source From Firstpost
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