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

Call to support IIM-Bangalore professor, censured for seeking action against Uniliver

Counterview Desk
Sections of the Indian Institute of Managements (IIMs) across India have strongly reacted to the decision to censure Dr Deepak Malghan, a faulty at IIM-Bangalore. Prabhir Vishnu Poruthiyil, who is faculty at IIM-Tiruchirapalli, has sought wider solidarity with Dr Malghan, saying, "The administration has censured Deepak for merely suggesting a meaningful action against Hindustan Unilever for their abysmal environmental record" by “disinviting” it for campus placement.

Noam Chomsky, top scholars ask NRIs to take stand on human rights violations in India

Counterview Desk
Renowned world scholars, including Noam Chomsky, James Petras, Angela Davis, Fredric Jameson, Bruno Latour, Ilan Pappe, Judith Butler, among others, have issued a statement castigating the Narendra Modi government for allegedly creating an environment of fear through arrests, intimidation and violence.

Actionable programme for 2019 polls amidst lynch mobs, caste violence, hate mongering

Counterview Desk
Reclaiming the Republic, a civil rights network, has released a document prepared under the chairmanship of Justice AP Shah (retired) -- and backed, among others, by Supreme Court advocate Prashant Bhushan, bureaucrat-turned-human rights activist Harsh Mander, economist Prabhat Patnaik, Right to transparency activist Anjali Bhardwaj and social scientist Yogendra Yadav  (click HERE for full list) -- with the "aim" of putting forth policy and legislative reforms needed to “protect” and “strengthen” the Constitutional safeguards for India’s democratic polity.

India under Modi "promoted" crony business, protected financial fraudsters, fueled bigotry

By Sandeep* and Rahul Pandey**
Narendra Modi's ascension to power was accompanied with jubilation and expectation. His supporters were expecting an end to era of corruption and initiation of good governance which was described as Achche Din. His party's adherence to idea of nationalism was believed to make India a vibrant country and guide India to be a world leader. He gave the slogan of 'Sabka Saath, Sabka Vikas' conveying that his government was for all.
Corruption The government system is infested with corruption. A minimum of 10% is siphoned off from government schemes and projects, some of which goes back to political party in power and remaining is pocketed by various administrative, executive and political functionaries. This corruption continues and has increased. Now an additional Rashtriya Swayamsewak Sangh (RSS) person working as Official on Special Duty or some equivalent position in every government department also has a share in this booty.
The Narendra M…

Inviting Rajapaksa to India "insult" to 1,40,000 Tamils killed by Sri Lankan army

Counterview Desk
In the context of Sri Lankan opposition leader Mahinda Rajapaksa being invited in India, about 75 human rights activists*, claiming to be concerned about rights violations during the civil war in Sri Lanka, especially in 2009, have joined together to express their dissent through a statement.

A Godse legacy? BJP rulers have "refrained" from calling Gandhi Father of the Nation

By Dr Hari Desai*
What an agony! On one hand, the entire India is celebrating the 150th birth anniversary of Mahatma Gandhi under the leadership of Prime Minister Narendra Modi, but on the other side, so-called Hindu Mahasabha members have been found mock-enacting the killing of the Mahatma and celebrating the murder by distributing sweets!

Post-advisory, Govt of India appears reluctant to ban e-cigarettes, "harmful" to kids

By Rajiv Shah
Is the Government of India dilly-dallying over the issue of banning e-cigarettes, which have been declared by anti-tobacco activists across the world as providing “an entryway to nicotine addiction”, especially among the kids? It would seem so, if the latest developments are any guide.

No aadhaar, no ration? Hard blow by Gujarat govt on poor and marginalized

By Pankti Jog*
Only those who have aadhaar registration and linked it with ration card will get ration from a Public Distribution System (PDS) shop. This decision of the Gujarat government has hit very badly thousands of poor and marginalized communities of Gujarat, especially during the drought year.

Poser to Modi: Why is Gujarat not fulfilling Constitutional obligations to minorities?

Counterview Desk
In an open letter, Mujahid Nafees, convener, Minority Coordination Committee (MCC), a Gujarat-based civil rights organization, has accused Prime Minister Narendra Modi on infringing upon MCC activists’ constitutional right to protest. Nafees says, they had no other demands except that the Gujarat government should move towards fulfilling the constitutional obligations towards minorities and international treaties to which India is a signatory.

World Bank needs a new perspective on development, not just a new president

By Maju Varghese*
The resignation of the World Bank President Jim Yong Kim was an unexpected development given the fact that he had three more years to complete his tenure. Resignations at such a high level after bidding for a second term is unusual which prompts people to think what would have led to the act itself.