Raghuram Rajan says no to second term; Industry terms it nation’s loss

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New Delhi | Updated: June 19, 2016 1:07:50 AM

In a surprising announcement, Reserve Bank of India (RBI) Governor Raghuram Rajan on Saturday said that he would return to the academic world at the end of his term on September 4, 2016, adding he will always be available to serve his country when needed and asserted that his ‘successor’ would take the nation to new heights

RBI monetary policy reviewRaghuram Rajan is currently on leave from the Chicago Booth School of Business where he holds the post of Distinguished Service Professor of Finance. (Reuters)

Buffetted by political attacks coupled with unending speculation over his continuance, RBI Governor Raghuram Rajan today said no to a second term in the post, a surprise decision the industry and opposition parties termed as nation’s loss.

Ruing that his work on containing inflation and cleaning up books of the banks was “yet to be completed”, Rajan said, “While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016.”

Speculation has been rife over whether Rajan, former IMF Chief Economist known to have predicted the 2008 global financial crisis, would get a second term after BJP leader Subramanian Swamy launched a no-holds barred attack on him recently accusing him of destroying economy with his hawkish stance on interest rates.

Swamy had also questioned whether Rajan was “mentally, fully Indian” as he holds a US Green Card, among other allegations.

53-year-old Rajan, who took charge as RBI Governor in September 2013 with a three-year term, had also ruffled feathers in the saffron camp with his outspoken views on issues like intolerance and his remarks about India being ‘one-eyed king in the land of blind’.

While Finance Minister Arun Jaitley called for restraint in public criticism in the wake of Swamy’s attacks, BJP President Amit Shah said the newly-nominated MP’s remarks were his personal opinion.

Answering questions on another term for Rajan, Prime Minister Narendra Modi had said that this “administrative subject” should not be an issue of interest to the media and it “will come up only in September”.

In his letter to colleagues, 53-year-old Rajan, appointed by the previous UPA Government in September 2013, said he “will, of course, always be available to serve my country when needed”.

Decision of Rajan, who was called a rockstar central banker, immediately set off speculation about his successor and the impact it could have on stock and bond markets when they open on Monday morning.

Jaitley, who had earlier steadfastly refused to discuss in public the issue of a second term for Rajan, welcomed his decision saying he respects it and said the government appreciates his good work.

A decision on successor to Rajan would be announced shortly, he said.

Check LIVE updates here

7. 25 pm: Let him (Raghuram Rajan) pretend that he is giving up and going. As long as he is going,it is good: Subramanian Swamy

7.20 pm: Govt appreciates good work done by Raghuram Rajan&respects his decision. A decision on his successor would be announced shortly-Arun Jaitley

7.15 pm: It is sad but expected. When you let loose people on him, what else will any self respecting person do?Congress on Raghuram Rajan

7.10 pm: Was he(R Rajan) getting a 2nd term in the first place? If he says he wants to go, I’ve no problem: Subramanian Swamy

7.05 pm: I hasten to add that I’m not surprised at all.As I had said, this Govt didn’t deserve Dr Rajan.Nevertheless,India is the loser:P Chidambaram

7.00 pm: Disappointed & saddened by Raghuram Rajan’s decision to leave the RBI on completion of his term on Sep 4,2016: P. Chidambaram’s statement

6.30 pm: Im confident my successor will take us to new heights. I’ll still be working with you for next couple of months: Raghuram Rajan

6.10 pm: I am sure the reforms the government is undertaking, together with what will be done by you and other regulators will build on this platform and reflect in greater job growth and prosperity for our people in the years to come: Raghuram Rajan

6.00 pm: Raguram Rajan is a Govt employee, & govt employees are not selected on the basis of popular vote: Subramanian Swamy

5.20 pm:  Enough has been said about Vijay Mallya’s escape being abetted by the Govt of India: Manish Tewari, Congress

4.55 pm: I will, of course, always be available to serve my country when needed: RBI Governor Raghuram Rajan in a statement

4.50 pm: RBI governor Raghuram Rajan says ‘will be returning to academia when term as Gov ends on Sept 4,2016’

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