Who caused Raghuram Rajan's exit? Swamy, Gurumurthy or Narendra Modi?

Following the 1998 Lok Sabha elections, when Atal Bihari Vajpayee was busy preparing the list of his council of ministers, an unscheduled visit by RSS Sar Karyavah (general secretary) KS Sudarshan upended his meticulous planning.

Sudarshan carried a specific and unambiguous message, that those who lost Lok Sabha polls must not be inducted in the council of ministers. Without making it obvious, Sudarshan’s conditionality eliminated the possibility of induction of two close associates of Vajpayee in the cabinet – Jaswant Singh and Pramod Mahajan – as both had lost their respective elections.

Though Vajpayee initially acquiesced to Sudarshan’s demand, he ultimately succeeded in throwing off his handcuffs and inducted Singh and Mahajan in his council of ministers, with important assignments. In spite of Vajpayee’s excellent personal rapport with the then RSS chief, Rajendra Singh alias Rajju Bhaiya, his relationship with the RSS remained strained all through his tenure as prime minister.

The story of Vajpayee’s run-in with a strong, powerful lobby within the Sangh Parivar – which claims to espouse “economic nationalism” and is known as the Swadeshi Jagran Manch (SJM) – bears significance in the context of Raghuram Rajan’s decision to quit as the governor of the Reserve Bank of India (RBI) with just one difference: the story of Rajan’s exit, prima facie, is much more complex than the simple narrative of 1998.

Unlike 1998 – when Sudarshan by virtue of his position in the RSS could throw his weight around – the SJM now plays a relatively marginal role, even within the Sangh Parivar’s scheme of things.

S Gurumurthy, a chartered-accountant-turned-RSS ideologue, occasionally associates himself with the SJM but carries himself under the banner of “economic nationalism” by raising various political and economic issues.

Of late he is increasingly aligned with the cause of reviewing the Indian constitution and rooting it in the Indian value system – a cause bound to cause serious headache for the BJP in general, and for Prime Minister Narendra Modi in particular, in view of the upcoming 2017 Uttar Pradesh Assembly elections.

Gurumurthy has additionally taken up the cause of running down the RBI governor on the issue of his handling of the PSU (Public Sector Undertaking) banks. In his detailed article , Gurumurthy was particularly critical of Rajan’s obsession with regulating the Indian PSU banks with international Basel norms and creating a situation for divestment. In Gurumurthy’s view, Rajan’s overemphasis on the NPAs (non-performing assets) of the PSU banks is intended to pave way for foreign banks in India.

Gurumurthy was never coy about his serious reservations on the appointment of Rajan as RBI governor during the UPA 2 regime. And when the reins of government changed hands, he only stepped up his attack on Rajan, often using him as a punching bag to target his bête noire in the government – Union Finance Minister Arun Jaitley.

But, even his close associates doubt whether Gurumurthy carried enough weight to influence the prime minister’s decision. There is little doubt over the fact that Modi and Gurumurthy shared a good equation for a long time. Would that have been enough for Gurumurthy to influence the PM’s decision on Rajan?

The answer to this query lies in the complex structure of the Sangh Parivar, and the relationship within its various constituents. By no stretch of imagination is Gurumurthy like Sudarshan, or Modi like Vajpayee. Far from it. Modi’s stature far outweighs his contemporaries within the parivar and is unparalleled.

The fact that he is totally immersed in the Sangh Parivar’s value system effectively insulates him from the criticism of being an outsider. Since he retains his popularity, the RSS and its adjuncts would not like to be seen as obstructionists, even if Modi’s decisions are not fully palatable.

In Rajan’s context, it seems to be a strange coincidence that the interests of three conflicting personalities – Jaitley, Gurumurthy and Subramanian Swamy – converged to ensure the ouster of the RBI governor.

It is no secret in the government that Rajan was not at ease with the union finance minister. Though Swamy had no axe to grind against Rajan, his penchant for hogging the limelight seems to have guided his recent tirade against the RBI governor.

If whispers in the corridors of power in New Delhi are to be believed, Prime Minister Narendra Modi had once casually inquired about Rajan’s willingness to take charge of the finance ministry. That might be an exaggeration but it is well-known that the prime minister called Rajan his “best economics teacher”. Thus, insiders in the government say, the prime minister was never in doubt about Rajan’s competence and intellect. Rajan couldn’t just fill the trust deficit between him and the government — on the contrary his constant public posturing on matters non-monetary only widened that deficit. And that cost Rajan his second term and the man denying it was none other than the prime minister.

By all indications, the prime minister had made up his mind much before the interests of Jaitley, Swamy and Gurumurthy converged. But the astute politician that he is, Modi left everyone guessing about the real reason behind Rajan’s exit. And if it seems like the hawks in the parivar won the day, it only suits him to allow that perception to gain ground and use the credits elsewhere. Such as in pushing through the biggest FDI reforms in one stroke on Monday.