#dnaEdit: Raghuram Rajan’s riposte

Raghuram Rajan seemed to have chosen his moment well. On a Saturday afternoon, he wrote to his colleagues in the Reserve Bank of India that he would be laying down office as governor of the bank and returning to the academy, his natural and preferred home. But he included a teaser. He said that he would be available to serve the country whenever it is needed. It was not a short note, either. He set out clearly and emphatically the achievements of the central bank under his stewardship. He made it a point to let it be known that the Indian economy was on a weak wicket back in 2013 when he took over, and that he had laid out an agenda to address the economic challenges. Without showing any false modesty, Rajan declared that the agenda has been fulfilled. 

This effectively ends the speculation and controversy that surrounded his second term after BJP’s member of the Rajya Sabha and a perceived hothead Subramanian Swamy, who asked for nothing less than Rajan’s scalp.

While the government maintained tactical silence, without refuting or concurring with Swamy’s views, many of the do-gooder middle class liberals in the cyberworld started off a pale campaign that Rajan should be given a second term. 

Rajan’s letter to his RBI colleagues shows a sense of injured pride of the man. He took the opportunity to set out in black and white what he had done as governor of the RBI. He said that when he took over, “the currency was plunging daily, inflation was high, and growth was weak. India was then deemed one of the “Fragile Five”. And he said that he had “laid out an agenda” which included “a new monetary framework that focused on bringing inflation down, raising of Foreign Currency Non-Resident (B) deposits to bolster our foreign exchange reserves.” Then he claimed, “Today, I feel proud that we at the Reserve Bank have delivered on all these proposals.” 

The critics of Rajan are sure to question and contest his claims, and there is likely to be shrill debate about what he has done in weeks to come. By stating what he thinks have been the achievements during his time as governor, Rajan is really throwing down the gauntlet to his detractors. Clearly, Rajan is not clearly leaving the scene quietly. He is making a dramatic exit with a rhetorical flourish. This is not something that is expected of central bank governors because the general picture of them is that of lugubrious eggheads, who can only address their own peers and not the general public. In contrast, Rajan cut a dashing figure, who was smart in his appearance as well as in his speech. While the young people, with whom he interacted quite often in the last three years, rooted for him and identified with him, there were many other orthodox folks, especially in the political parties, who felt that he was not playing the game according to rules, which was that of remaining faceless. Anonymity is not for Rajan.

It has to be conceded that Rajan has done the right thing by announcing his exit early enough so that there is no room for baseless speculation. It gives time to the government to choose his successor. It would be preposterous to suggest that the Indian economy would be in trouble without Rajan at the RBI helm. His detractors have paid him a compliment by raking up a controversy over his refusal to bring down interest rates to abet economic populism.