Reserve Bank of India Governor Raghuram Rajan is scheduled to present his last monetary policy review on Tuesday before his tenure ends next month
Reserve Bank of India Governor Raghuram Rajan is scheduled to present his last monetary policy review on Tuesday before his tenure ends next month. In a message to RBI staff in June which was released on the central bank’s website Rajan said he will not continue in his current job after September 4. “I am an academic and I have always made it clear that my ultimate home is in the realm of ideas,” Rajan said while reflecting on his accomplishments in the last three years. He expressed confidence that government reforms and work at the RBI and other regulators will lead to greater job growth and prosperity for Indians in the years to come.
However, he has also been very vocal about various things. In a quaint manner he has expressed his views on a number of topics entirely unrelated to his job, which have created a lot of heat and dust in the political firmament. Here are 5 things that Raghuram Rajan said that got him into trouble:
1) Rajan’s description of the Indian economy as andhon mein kaana raja (a one-eyed king in the land of the blind), invited disapproval from finance minister Arun Jaitley, Jayant Sinha as well as commerce minister Nirmala Seetharaman. But Rajan has repeatedly made the point about not getting carried away with the “fastest growing economy” tag. “India is the fastest-growing large economy in the world. But as a central banker, I cannot get euphoric with India’s economic growth rate as it is at the cusp of a substantial pick-up in growth. I see scope to grow faster, given the capacity utilisation and agricultural output,” he said.
2) Rajan again got into trouble with the establishment by stepping into the then raging intolerance debate saying that tolerance and tradition of debate and openness help form the foundation for current and future success of the country. Speaking to the students at Indian Institute of Technology, New Delhi, Rajan said tolerance means not being so insecure about one’s ideas that one cannot subject them to challenge. “The first essential is to foster competition in the market place for ideas. Without this competition for ideas, we have stagnation.” Raghuram Rajan said.
3) Make For India: In 2014, he cautioned against the ‘Make In India’ scheme’s effort to make India a global manufacturing hub, arguing that India had missed that bus. The domestic market, however, was so large that the policy should be ‘Make for India’. Rajan said in a speech to business students in Kashmir, “I am also cautioning against picking a particular sector such as manufacturing for encouragement simply because it has worked well for China. India is different, and developing at a different time, and we should be agnostic about what will work.”
4) “The RBI is not a cheerleader,” he said in June last year, indicating it was his job to strike a cautionary note amidst euphoria. “Our job is to give people confidence in the value of the rupee, in the prospects of inflation, and having established that confidence, create a longer-term framework for good decisions to be made. Every time an exporter comes to me and says that stability has been very valuable for us to make decisions, that reinforces my view that these our main role is not to act as cheerleaders,” he explained. “The governorship of the central bank is not meant to win one votes or Facebook ‘likes’. But I hope to do the right thing, no matter what the criticism, even while looking to learn from the criticism,” he said on another occasion.
5) In August 2014, soon after the Modi government came to power, Rajan said in a speech, “One of the greatest dangers to the growth of developing countries is the middle-income trap, where crony capitalism creates oligarchies that slow down growth. If the debate during the elections is any pointer, this is a very real concern of the public in India today.” Rajan warned that crony capitalism’s impact on bad loans in public sector banking could spell trouble. No one wants to go after rich and well-connected wrongdoer, he said.