Skip to main content

Chicago University backs RBI governor, says Rajan fought crony capitalism, bad debt, hence under attack

By Our Representative
The University of Chicago, from where Reserve Bank of India (RBI) governor Raghuram Rajan has been on leave for three years, has warned through a blog that the decision of the “highly regarded central banker” to leave his job in September this year following “attack by politicians” is likely to “reverberate throughout India’s political system and financial sector”.
Pointing out that Rajan will return to his position as professor at the University of Chicago, the blog, sponsored by the Stigler Center at the University of Chicago Booth School of Business, credits him managing for managing “nearly halve the inflation rate and restore stability to the Indian economy.”
The warning follows a two strongly worded articles on the blog site, promarket.org, by the university’s top experts Luigi Zingales and Guy Rolnik.
Zingales, in his blog titled “RBI Governor Rajan’s Fight Against Crony Capitalism”, says, “In any country in the world, a central banker who has managed to reduce inflation from 11 percent to 5 percent while simultaneously enabling an increase in growth from 5 percent to 8 percent in just three years would have a guaranteed reconfirmation. Not in India.”
Pointing out that the “Governor of India’s Central Bank, Raghuram Rajan, much admired by the international press, is under heavy attack in his country”, Zingales says, “The charges against him are absurd”, referring to Subramaniam Swamy’s phrase that Rajan is ‘mentally not fully Indian’.
Zingales says, Rajan has fought “not only inflation, but also the inefficiency of the banking system, burdened by bad loans”, pointing out how the the Indian banking system is “mainly in public hands and was used to finance crony capitalism, which has held the country back for too many years.”
“As Governor, Rajan has rightly decided to force the banks to cut down exposure to their most dubious borrowers, even at the cost of bringing out non-performing loans”, says Zingales, adding, “With the country growing at 8 percent, these losses can be easily absorbed by the banking system.”
“Though it was the right thing, this policy has produced collateral damage: banks’ share prices were affected, and even more affected were those Indian oligarchs who had enjoyed easy credit”, Zingales says, adding, “They are the ones fueling dissent, because Rajan has dared to publicly criticize the behavior of some of them.”
By way of an example, Zingales says, “In January, while at Davos, Rajan reprimanded Vijay Mallya, owner of the corrupt Kingfisher airline, who had sumptuously celebrated his 60th birthday despite his debt of 922 million euros to 17 banks.”
In a separate article titled “The Attacks on RBI Governor Raghuram Rajan: Lessons from Stanley Fischer as a Central Banker”, the other senior expert Guy Rolnik compares Rajan with Fischer, Israel’s former governor of the Bank of Israel, saying, “Fischer found himself under attack from some of the most powerful political players in Israel, including the local media.”
Fischer, says Rolnik, was under attack because he exposed how one percent of the businesses receive an inordinate amount of the loans in Israel, which meant that a lot of other businesses that could have been successful didn’t receive loans.
Fischer won in the battle seven years ago, says Rolnik, reducing the exposure to large loans given to a few powerful business groups, leading to the introduction of reforms, ultimately reducing “these groups’ political power”, adding, the cleanup tried by Rajan reminds one of what Fischer did in Israel.
Rajan “has been under attack in the last few months” in the same way as Fischer from “politician and economist Subramanian Swamy”, says Rolnik, adding, Rajan has tried to deal “with crony banking in India” almost on similar lines.

Comments

TRENDING

Allow international human rights observers, media to access Kashmir: US lawmakers

Counterview Desk
In a letter to US Secretary of State Mike Pompeo, two members of the American Congress, Pramila Jayapal and James McGovern, raising "significant concerns" about what they call "humanitarian and human rights crisis in Jammu & Kashmir”, quoting "credible reports" from journalists and advocates on the ground" have said that "the Indian government has detained thousands of people with no recourse, imposed de facto curfews on residents' and cut off internet and telephone access in the region.”

TN woman's No Caste, No Religion struggle 'follows' ideals of Marx, Ambedkar, Periyar

By Sheshu Babu*
In these days of rising communal tensions, a courageous woman from Tamil Nadu achieved her dream of obtaining 'No Caste, No Religion' certificate through persistent struggle. This is quite a significant achievement. It comes alongside some colleges in West Bengal introducing 'humanity', 'agnostic' , 'secular' or 'non-religious' in the application forms for online submission for students who are unwilling to disclose their faith.

Rescind Gates Foundation award to Modi, demand three Nobel Peace laureates

Counterview Desk
In a major boost to those opposing the award to the Gates Foundation’s proposed to be awarded to Prime Minister Narendra Modi for his Swacch Bharat Abhiyan, three Nobel Peace Prize laureates, Mairead Maguire (1976), Tawakkol Abdel-Salam Karman (2011) and Shirin Ebadi (2003), have in an open letter called upon Milinda and Bill Gates to withdraw their decision, stating Modi is allegedly involved in human rights violations.

US Kashmiri diaspora body: World leaders, UN 'not acting', India enjoys total impunity

Counterview Desk
Ahead of the United Nations General Assembly session, to begin on September 17 in New York, Dr Ghulam Nabi Fai, secretary-general of the World Kashmir Awareness Forum, a non-profit organization based in Ohio, US, claiming to focus on providing information on Kashmir, has regretted that despite "violent" behaviour of Indian authorities in Kashmir, they enjoy "total impunity" across the world.

Modi used to 'run errands' during Emergency, his role was that much: Top JP associate

By Rajiv Shah
In a sharp exposure, well-known Gujarati critic, journalist and activist Prakash N Shah, who had been among the main contact persons of Jay Prakash Narayan (JP) in Gujarat, has recalled that Prime Minister Narendra Modi was “merely running errands” during the Emergency (1975-77) period, adding the PM’s stature has been “sought to be unnecessarily inflated”, though adding, he is not saying this to “belittle him.”

Jharkhand riverine terminal: 485 families 'displaced', lose land, livelihood in Sahibgunj

Counterview Desk
Even as Prime Minister Narendra Modi proposes to inaugurate on Thursday India’s second riverine Multi-Modal terminal (MMT) at Sahibganj in Jharkhand, built at a cost of Rs 290 crore reportedly in a record time of about two years, several civil rights organizations* have said that the government has failed to address the high-profile terminal’s social and environmental concerns.

Now clampdown on rally, arrest of pro-freedom activists in Pak-occupied Kashmir

Counterview Desk
In a fresh evidence, international human rights organizations are not just confining their attention on the Indian state of Jammu & Kashmir (J&K), whose special status was taken away by the Government of India in early August, leading to an unprecedented clampdown on the region. They have simultaneously begun focusing on the Pakistan-occupied Kashmir (PoK), where the situation is said to be worsening.
Thus, the International Human Rights Council ((IHRC) Hong Kong (HK), a top human rights organisation, said to be working towards to the promotion peace, equality, fundamental rights and social justice “as enunciated in the UN Human Rights Charter and other instruments of human rights”, has noted now a new wave of independence movement has struck PoK.  With offices in US, UK, Switzerland and Hong Kong, and having Kirity Roy and Lenin Raghuvanshi as IHRC office bearers from India, in a statement, it has claimed that on September 7 one of the biggest pro-Independenc…

Govt of India 'moves' to hold Assam-type foreigners' tribunals across India, warns report

Counterview Desk
A People’s Tribunal on the National Register of Citizens (NRC) has warned in its interim jury report that two recent notifications of the Government of India may lay down the groundwork for triggering an NRC process in different parts of the country, pointing towards recent moves towards this.

India performs 'poorly' in Quality of Life Index, ranks 62nd out of 64 countries

Counterview Desk
“Expat Insider”, which claims to be one of the world’s most extensive surveys about living and working abroad, in a survey of 20,259 participants from around the globe, has found that of the 64 destinations around the globe, has found that while Taiwan is the best destination for persons living outside their native country, closely by Vietnam and Portugal, India ranks 59th.

New sample suggests high pollution off Vadodara effluent channel, 'requires' action

Counterview Desk 
Gujarat’s top environmental group Paryavaran Suraksha Samiti (PSS) has sharply criticized the Gujarat Pollution Control Board’s (GPCB’s) “on-serious, casual letter” dated September 5, which allegedly suggests that the top state state agency does not favour taking any action Central Gujarat’s effluent treatment plant, Vadodara Enviro Channel Ltd (VECL).