Skip to main content

Raghuram Rajan declares he will quit RBI in September, says he has decided this after "consulting" government

By Our Representative
In what may turn out to a major upheaval in India’s economic governance, Reserve Bank of India (RBI) governor Raghuram Rajan has declared that he will not continue with his job after his term ends on September 4, and will return to the University of Chicago, from where he has been on “leave”, setting aside all speculation around him.
In an open letter to RBI colleagues, Dr Rajan said, “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.”
The development comes close on the heels of latest attacks fired by BJP MP Subramanian Swamy, who in a letter to Prime Minister Narendra Modi sought formation of a Special Investigation Team (SIT) to investigate charges of money laundering against Dr Rajan. Despite a series of accusations, Modi kept his mum.
In an earlier letter, Swamy urged Modi to sack Rajan because he was 'deliberately' trying to "wreck the Indian economy", and was also "mentally not fully Indian". He later openly said, if India wanted to see economic growth at 10 per cent, Dr Rajan should go back to Chicago.
At another placed Swamy said, Dr Rajan had planted “a time bomb in our financial system in 2013, timed for December 2016”, in the form of “the redeemable USD 24 billion in foreign exchance to be paid out by banks". Swamy was referring to the upcoming redemption pressure on banks when the foreign currency non-resident (bank) (FCNRB) deposits mature in the September-November period this year.
Refusing to reply to any of these allegations, Dr Rajan in his letter to colleagues referred to the last allegation denying any such time bomb exists. He said, “We have made adequate preparations for the repayment of Foreign Currency Non-Resident (B) deposits and their outflow, managed properly, should largely be a non-event”, pointing out that raising of” Foreign Currency Non-Resident (B) deposits” was necessary to “bolster our foreign exchange reserves.”  
Immediately after Swamy’s first attacks, which happened last month, the top British daily, “The Financial Times (FT)” (May 29), warned, the criticism of Dr Rajan, one of the topmost economists, had begun to “worry investors”, with international investors wondering whether Dr Rajan might be replaced by someone more pliant — and less voluble – as RBI chief.
FT said, “To many international investors, the Rajan is a near-hero — the articulate, market-savvy central banker who tamed India’s inflation, restored its macroeconomic stability and is driving a banking system clean-up.”
Declaring his decision to quit RBI, Dr Rajan said, he took office in September 2013 when the Indian currency was plunging, inflation was high, and growth was weak, with India deemed as one of the “Fragile Five”.
Other steps he enumerated are “Transparent licensing of new universal and niche banks by committees of unimpeachable integrity, creating new institutions such as the Bharat Bill Payment System and the Trade Receivables Exchange, expanding payments to all via mobile phones, and developing a large loan data base to better map and resolve the extent of system-wide distress.”
Saying that he is “proud” that the RBI has “delivered on all these proposals” and “a new inflation-focused framework is in place that has helped halve inflation and allowed savers to earn positive real interest rates on deposits after a long time”, Dr Rajan said, “We have also been able to cut interest rates by 150 basis points after raising them initially.”
Pointing out that this has “reduced the nominal interest rate the government has to pay even while lengthening maturities it can issue”, he noted, “The government has been able to issue a 40 year bond for the first time.”
“Finally, the currency stabilized after our actions, and our foreign exchange reserves are at a record high, even after we have fully provided for the outflow of foreign currency deposits we secured in 2013. Today, we are the fastest growing large economy in the world, having long exited the ranks of the Fragile Five”, he added.
Among the “eminent public citizens” on RBI Board who guided the RBI, Dr Rajan named “Dr Anil Kakodkar, former Chairman of the Atomic Energy Commission and Padma Bhushan, and Magsaysay award winner Ela Bhatt of the Self Employed Women’s Association (SEWA).” An Ahmedabad-based women’s trade union, Bhatt’s relations with Modi during the latter’s chief ministership of Gujarat are known to have been sour.

Comments

Anonymous said…
The next governor will be another Modi chamcha/RSS recruit in the ever extending list of such puppets.

TRENDING

India under Modi among top 10 autocratizing nations, on verge of 'losing' democracy status

By Rajiv Shah
A new report, prepared by a top Swedish institute studying liberal democracy, has observed that there has been a sharp “dive in press freedom along with increasing repression of civil society in India associated with the current Hindu-nationalist regime of Prime Minister Narendra Modi.” The report places India among the top 10 countries that “have autocratized the most”. Other countries that have been identified for rolling towards autocracy are -- Hungary, Turkey, Poland, Serbia, Brazil, Mali, Thailand, Nicaragua and Zambia.

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam*
RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

RSS supremo Deoras 'supported' Emergency, but Indira, Sanjay Gandhi 'didn't respond'

By Shamsul Islam*
National Emergency was imposed on the country by then Prime Minister Indira Gandhi on June 25-26, 1975, and it lasted for 19 months. This period is considered as ''dark times' for Indian democratic polity. Indira Gandhi claimed that due to Jaiprakash Narayan's call to the armed forces to disobey the 'illegal' orders of Congress rulers had created a situation of anarchy and there was danger to the existence of Indian Republic so there was no alternative but to impose Emergency under article 352 of the Constitution.

Letter to friends, mentors: Coming together of class, communal, corona viruses 'scary'

By Prof (Dr) Mansee Bal Bhargava*
COVID greetings from Ahmedabad to dear mentors and friends from around the world…
I hope you are keeping well and taking care of yourself besides caring for the people around you. I’m writing to learn how is the science and the society coping with the prevention and cure of the pandemic. I’m also writing to share the state of the corona virus that is further complicated with the long-standing class and communal viruses.

Clean chit to British rulers, Muslim League? Karnataka to have Veer Savarkar flyovers

By Shamsul Islam*
The BJP government of Karnataka led by BS Yediyurappa is going to honour Hindutva icon VD Savarkar by naming two of the newly built major flyovers in Bangalore and Mangalore after him. There was a huge uproar against this decision of the RSS-BJP government as many pro-Kannada organisations with opposition parties and liberal-secular organizations questioned the logic to ignore so many freedom fighters, social reformers and others from within the state.

Hurried nod to Western Ghat projects: 16 lakh Goans' water security 'jeopardised'

Counterview Desk
Taking strong exception to "virtual clearances" to eco-sensitive projects in the Western Ghats, the National Alliance of People’s Movements (NAPM) in a statement has said urged for a review of the four-lane highway, 400 KV transmission line and double tracking of the railway line through the Bhagwan Mahavir Wildlife Sanctuary and Mollem National Park in Goa.

Border conflict? RBI nod India's 'brotherly' help to China internationalise its currency

By Bhabani Shankar Nayak*
In the middle of a global pandemic, China started an unprovoked border conflict with India. It unraveled trust deficit and ties between the two neighbours. As thousands of Chinese troops tried occupying Indian territory, the Narendra Modi-led BJP government directs the Reserve Bank of India (RBI) to allow the Bank of China to start regular banking services in India. The Bank of China will now operate in India like any other commercial banks.

Disturbing signal? Reliance 'shifting focus' away from Indian petrochemical sector

By NS Venkataraman*
Reliance Industries Ltd (RIL), a large Indian company, has expanded and grown in a spectacular manner during the last few decades, like of which no industrial group in India has performed before. RIL is now involved in multi various activities relating to petroleum refineries, petrochemicals, oil and gas exploration, coal bed methane, life sciences, retail business, communication network, (Jio platform) media/entertainment etc.

Case for nationalising India's healthcare system amidst 'strong' private control

Counterview Desk
A draft discussion note, prepared by Dr Maya Valecha, a Gujarat-based gynecologist and activist, sent to the People's Union for Civil Liberties (PUCL) as also a large number of activists, academics and professionals as an email alert, is all set to create a flutter among policy experts for its strong insistence on nationalizing India’s healthcare system.