Lt Gen Bhopinder Singh (Retd)
Contrary to the popular belief, the appointment to the post of RBI Governor is not a constitutional post. The Reserve Bank of India Act 1934 that governs the rules, gives primacy to the incumbent Central Government to ‘influence’, direct and supersede the actions of Central Bank, though over the years, there has been a growing acceptance and perception of the “freedom” to work independently. Given the playing field and the deliverables of the RBI touch points and impact, the Finance Ministry (and earlier, the Planning Commission also) has an interactive and inter-twined role.
So, in that context, the personal confidence of the Central government on the incumbent RBI Governor is critical for shaping the economic destiny and direction of the national economy. Secondly, the central Government is also within its legitimate and moral right to appoint any person that it deems fit to hold the position or not to reappoint an sitting RBI Governor for an additional term. However the fuss in the case of the 23rdRBI Governor, Raghuram Govind Rajan is less about the technicalities, but more about the personalities involved and the lack of propriety and grace afforded onto a person, who by the very exacting and demanding standards of theIndian Industry, was seen to be doing a fine job of steering the rocking ship.
In today’s political environment, the fact that Raghuram Rajan was a Dr Manmohan Singh appointee, would not have helped his case for a second term – nor, the fact that he indulged in plain-speaking on professional matters. His slamming of ‘Jugaad’, culture of loan waivers and moderation of the chest-thumping spiel, with his famous, “In the land of the blind, the one-eyed man is a king”, would have gone against the busy spin-doctors of the ‘ache din’ laboratory, a political necessity of managing electoral perceptions. Similarly, his weight for “Make for India” as opposed to “Make in India” as the ideal pitch, was susceptible to political interpretations. So, there were enough reasons for the Government to bring in a more aligned RBI Governor – however, it was the methods deployed in the run-up to his resignation, whichhas raised the hackles.
The unkindest cut was the open sniping by Dr Subramanian Swamy who went to the extent of saying that Raghuram Rajan was a “Congress Agent” and that he should be “sacked”. Further on getting personal, Dr Swamy said Raghuram Rajan was “mentally not fully Indian” and had “willfully” wrecked the economy, an accusation that is unpardonable by any levels of public decency and probity. In going public in his tirade (and importantly, allowed so by the Government), Dr Swamy seeded the question on Raghuram Rajan’s continuation as the RBI Governor, that was promptly followed by the untimely appointment of a financial sector regulatory appointment search committee to shortlist the next RBI Governor – the fact that this was a first time ever move and that it came about after the meeting of the Prime Minister along with the Finance Minister on the issue of reappointment, this would have been the proverbial last straw on the camel’s back. Presumably, Raghuram Rajan would have seen the writing on the wall and would have preferred the graceful act of throwing in the towel as opposed to getting into a mud wrestle with the shrill politicos. The fact that the straight speaking RBI Governor never denied his interest in a second term and often alluded to the “unfinished agendas”, signifies an obvious intent to aspire for a second term, as has been the precedent in the recent times (he would be, only the second Reserve Bank Governor to get than less than 5 years term in the last 25 years).
Intrinsically an academician who is not versed or comfortable with the rumble and tumble of the political classes, Raghuram Rajan lamented about the work “yet to be completed” on controlling inflation and cleaning the bank books, while ruefully and a tad bit sadly adding that he, “was open to seeing the developments through”, gently signaling the unhappy nudging-out from the system.As regards the ostensible professional errors of judgement and economy mismanagement by failing to lower interest rates to boost economy or in containing inflation, there is no credible professional castigation by economists (domestically or internationally) or by professional policy makers to give credence to the theory of incompetence. In any case, any desired change of track on professional imperatives and actions requires a simple governmental intervention which was never the case, hence the unlikelihood of strictly professional issues of competence or decisions taking by Raghuram Rajan, during his tenure.
While the entire show has been managed within the consonance of laws, murmurs of petty politics are bound to arise. It is true that the institution is always larger than the individual, however in this case the fright of an expected public-backlash had to be mitigated and nuanced with the sudden changes in foreign direct investment policy to trounce the jitters.
Going forward, there are a host of capable candidates to choose from, and the Government will surely appoint a worthy successor -the only catch is, in recent times appointments to bodies like FTII, Censor Board and more recently to the NIFT have befuddled people on the choices made by the Government.Clearly, professional, domain competence or stature have not been the deciding criteria, it is in this light that the Raghuram Rajan exit raises eyebrows as he was seen as the poster boy of the much needed economic leadership and management.
Raghuram Rajan can always look back at his stint with pride, from the stage of “Fragile Five”, when he took over the mantle with high inflation and intense pressure on the rupee to the journey where we are today saying, “Today, we are the fastest growing large economy in the world, having long exited the ranks of the Fragile Five”. The track record of the man is etched in immortality and the only sad part is not the denial of the much-deserved second term, it is the way the denial was executed and forced-upon. Grace is not an adjective used in the corridors of power in Lutyens Delhi, anymore – Raghuram Rajan case is the reassertion of the fact that in India, partisan and petty politics still triumphs over professional competence.
(The author is former Lt Governor of Andaman Nicobar islands and Puducherry)
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