Rajan should have been retained
Whether Raghuram Rajan, the RBI Governor, is irreplaceable or not can be a debate that can go on endlessly. The truth is Rajan was successfully able to steer the Indian economy out of woods and restore its credibility in the face of high-volatile situations, brought respectability to the Indian rupee, contained inflation to a manageable level and also built a cushion of foreign exchange reserves to fall back on in emergencies. He has worked hard to put in place mechanisms for building a robust and sustainable banking system and shielded Indian banks from a Lehman-like crisis. This is not to suggest that there is a dearth of talent in India nor that there is no one as good as Rajan, but when somebody is doing a remarkably good job in an extremely tough situation, retaining him or her should be an obvious thing to aim for, so that continuity in policy and perceptions can be ensured. He commands enormous respect across the world for his deep understanding of complex economic issues and is has been honoured as the best central bank Governor in the world. At times, his thought-process and actions are even beyond the understanding of a good economist. He has created a legacy for RBI that will need to be carried forward. For sure, differences were bound to persist but clearly, he wasn’t happy with the kind of needless politics played against him by a few in the recent past. Rajan’s exit from Mint Street has the potential to cause a setback to the market, something that Indian economy must quickly learn to deal with it. His exit is disappointing and yet not entirely surprising. Undeniably, he is the most envied RBI Governor one has ever seen in the recent times. Economics should be above politics and the post of Governor should be kept independent without interference from any quarter.
Srinivasan Umashankar, Nagpur
Banking on audits
Apropos of the article “Auditors key to resolving NPA crisis” (FE, June 30), auditors do play a vital role in detecting non-performing assets and accounts which are likely to slip. Branches are required to bridge the gaps as per the observations of the auditors within the stipulated time. At a time when the banking sector, more particularly state-owned banks, is reeling from the pressure of rising stressed assets and facing sluggish growth in business, they are not devoting much effort and time for audit compliance because the branches are inadequately staffed. Consequently, the quality of the compliance is getting adversely affected and the audit is getting defeated.
VSK Pillai, Kottayam