RBI Governor Raghuram Rajan’s sudden announcement this past week that he would not be continuing in his position once his term ends in September, and will instead be returning to academia in the US, has understandably caused a lot of heartburn among the commentariat especially the Online Outrage Folks (OOF).
For a central banker, Rajan has been a widely popular figure -- Highly-educated, well-spoken, much accomplished and with his reputation of having predicted the 2007-08 financial collapse preceding him, he was ‘India’s rockstar governor’. That he was good looking, smartly-dressed and had a charming persona didn’t hurt either. More importantly, during his three-year tenure, Rajan performed reasonably well. There were, of course, some differing opinions about his policies but that is not relevant to the subject at hand – which is, Rajan’s exit and the outcry from certain sections that he was hounded out of office by the Government of Prime Minister Narendra Modi.
A few things need to be clarified: First, the RBI Governor is a political appointee who serves at the pleasure of the Government. Rajan was appointed by the previous UPA regime but Modi kept him on till the end of his term ostensibly because he believed that they were on the same page. Just because Rajan’s term has now not been renewed or extended (remember, even Manmohan Singh as RBI Governor served only one term under Prime Minister Rajiv Gandhi), it is unfair to assume that he is being chased out. Herein, it is important to note that Rajan, who often blurred the lines between public figure and public intellectual, on quite a few occasions, publicly criticised the Government and the Indian economy. This clashed with the Government’s efforts to talk up the India story.
This may not have been a big deal within the country there are many dissenting and critical voices, and rightly so, but on foreign shores, where Rajan’s voice carries credibility and influence, it hurt the country’s interests. That said, it must also be noted in no uncertain terms that while Rajan’s departure has been overplayed, the circumstances under which he is leaving are truly disappointing – particularly, the recent smear campaign against him was totally unnecessary.