RAJAN'S RETURN TO ACADEMICS - DIRTY POLITICS?

By Ruma Dubey

No one is indispensable. That’s what we learn time and again through life.

RBI and India will continue to thrive and exist even after the exit of Raghuram Rajan. The markets are just about holding onto the green today, defiantly trying to prove this very point that if Rajan goes, someone else will come. India is country with immense brain and talent; so finding the next successor is not a big deal.

But despite all these arguments, there is a bitter taste in the mouth. The very way in which Rajan decided to leave is what is bothersome. The message which his leaving has conveyed is scary. What it means is that if you are defiant and do not toe the line of the Government, you have to go. This need to have a subservient head at every decision making institution of India is very very worrisome.

All RBI Governors have always been fiercely independent. In fact just like Rajan, his predecessor, Subba Rao too had his share of differences with the Govt but he held his steed and that too for two terms. But with Rajan, his streak of independence was probably too much for the Govt to stomach. He had very famously said, “I am Raghuram Rajan. I do what I do". Jaitley wanted Rajan to reduce interest rates but the Governor did not move and instead decided to concentrate on budget deficit. When it came to “Make in India”, Rajan said that India should rather look at “Make for India”. And more recently, he said that instead of trying to emulate the growth path of China or any other nation, we should chalk out our very own growth path. Rajan spoke openly about crony capitalism and focused on cleaning up the banks.

Naturally, given the growing media following for Rajan and his steadfast independent stance, he rubbed many in power the wrong end. If he was asked to go for being so independent then that is what we all Indians should be worried about. The way the Govt has appointed some pedestrian people to head institutions like the Censor Board, Film and Television Institute of India and more recently the appointment of Chetan Chauhan, ex-cricketer and two-time BJP MP, as the head of National Institute of Fashion Technology (NIFT) is extremely worrisome. What does Chauhan know about fashion?  So the bigger question is whether the Govt is appointing a “Yes Man” in all so-called independent institutions? Is that the reason why Rajan was asked to go? Or because he held onto interest rates while the Govt thinks that growth is not picking up only because of higher interest rates? If that is the case then why are USA, Japan langusihing with near zero percent interest rates?  And how can he be blamed whem repo rates are actually at 6.5% but the banks have not transmitted this benefit to the consumers?

We constantly worry about talent and brains draining out of India. We lament about how we do not have the wherewithal to retain talent. So how different was this move to get Rajan out? Yes, there might be many more Rajan’s or even better than Rajan people out there but the message which has come across today is that we care two hoots for talent and out-of-the-box thinking. He was responsible for keeping a tight leash on the Indian currency, opted to look at the CPI rather than the WPI while making policy decisions, more importantly brought in reforms on the bank licensing front.  It is not about how he looks or how he talks what he thinks; it is about his competence which he more than proved.  He is the first Indian to be chosen as vice-chairman of the Bureau for International Settlements (BIS), Basel, the institution of central bankers around the globe. This is what the world thinks of him and we go on to relegate him to being an academician.

With the Govt not doing anything to retain Rajan, there has been considerable damage caused to its image. It all now depends on who it appoints as the new Governor. Bringing politics into one of the most (and probably the only) respected institutions of India, the RBI, the Govt has tarnished its reputation. The Govt cannot tolerate free thinkers - that is the message sent.

We do not want a “Yes Man or Woman” leading RBI. But who cares whom we want or do not want....