Swamy wrote to PM Modi saying, “Governor Rajan is hurting Indian economy. The concept of containing inflation by raising interest rates is disastrous.”
“I have written to the PM about Rajan. Why should we retain a UPA appointee? He (Rajan) believes in raising interest rates to decrease inflation. This approach harms the small and medium industries a lot. These SMEs are the ones that generate jobs for the common man. Industrial growth is in negative because they (SMEs) are shut. This approach is like murdering someone suffering from fever, so that his body temperature drops,” Swamy said while explaining the contents of his letter.
Subramanian Swamy has alleged that Rajan is “mentally not fully Indian” and has “wilfully” wrecked the economy. “The reason why I recommend this is that I am shocked by the wilful and apparently deliberate attempt by Dr Rajan to wreck the Indian economy,” he wrote adding his concept of raising interest rates to contain inflation was “disastrous.” (Also read: Rajan’s 2nd term as RBI governor: From yes he could, to what he should do if re-appointed)
Also, bad loans with public sector banks has doubled to Rs 3.5 lakh crore in two years, he said.
“These actions of Dr Rajan lead me to believe that he is acting more as a disrupter of the Indian economy than the person who wants the Indian economy to improve. “Moreover he is in this country on a Green Card provided by the US government and therefore mentally not fully Indian. Otherwise why would he renew his Green Card as RBI Governor by making the mandatory annual visit to the US to keep the Green Card current?” he wrote.
Rajan, Swamy said, was “acting more as a disrupter of the Indian economy than the person who wants the Indian economy to improve.”
After assuming charge as RBI governor in September 2013, Rajan gradually raised the short-term lending rate from 7.25 per cent to 8 per cent and had retained the high rates throughout 2014.
He kept the rates high, citing inflationary concerns despite intense pressure from the Finance Ministry and the industry for softening them with a view to boosting growth.
The Governor began the process of lowering the rates in January 2015 and since then it has come down by 1.50 per cent to 6.50 per cent.
Swamy has always been a harsh critic of Rajan, and recently said that the RBI governor was not suited for India.
“Mujhe lagta hai RBI Governor hamare desh ke liye anukool nahin hain (I don’t think the RBI governor – Rajan – is fit for India),” Swamy had told ANI.
“The way he has raised interest rates saying that inflation will be curbed, the country has suffered because of this,” Swamy said. “Issey berozgaari badh gayi hai, usko jitna jaldi chutti karke Chicago bhej sakte ho, bhejna chahiye (His policies have resulted in increased unemployment. The sooner he goes to Chicago, the better),” he added.
Amid speculation about a possible second term for Rajan, Finance Minister Arun Jaitley on Monday declined to be drawn into the matter, but said there is a “mature relationship” between the central bank and the government. Rajan’s first term as RBI governor ends in September.
To a question whether Rajan is getting an extension, he quipped “these are not issues which we discuss through the media.”
Indicating his interest in a second term, Rajan on May 13 had said he has enjoyed every moment of the job, but there is “more to do”, despite calls from some sections of the ruling BJP against any extension for him.
Rajan, who had earlier also served as the Chief Economist of IMF and is known as a key commentator on financial issues globally, is the on-leave Professor of Finance at University of Chicago’s Booth School of Business.
(With inputs from PTI)