In just around three quarters of a year, Reserve Bank of India Governor Raghuram Rajan has done what the Union Government has not been able to do in years. The country’s fiscal health has improved significantly under his watch
What is the role of a Government, after allIJ The elected group of politicians in any democratic nation are supposed to ensure that there is continual social, economic and cultural upliftment of citizens through dynamic, focussed and objective-oriented policies and measures. On each and every such aspect, Indian politicians have made minimal and insignificant contributions. India’s pockets of improvements have either occurred because of the spirit and perseverance of its civil society, or in specific cases, because of a conspiratorial connivance of the political class with the business class. In either case, the impact of any advancement has not benefitted the majority of India’s population. How can one justify the fact that India still has such a massive population of people living Below the Poverty lineIJ
The 2013 World Bank report on poverty (The State of the Poor: Where are the Poor and Where are the PoorestIJ) shows that while the number of people living in extreme poverty globally has come down considerably over the past many decades, India now shamefully boasts of a higher percentage of the world’s poorest people as compared to three decades ago.
As per the study, 33 per cent of the world’s poorest people live in India, a shocking figure of 400 million-plus. Not to worry. Indian politicians have found a simple way of reducing the number of such poor people in India. They conveniently reduce the benchmark that is used to qualify a person as poor — as was done just a couple of years ago, when the Planning Commission reduced the poverty line to `28.65 per day in urban areas and `22.42 in rural areas — and then claim that poverty has been dramatically reduced. Not only have India's politicians been busy attempting to make their own gains, but those in power have refused to take the bull by the horns. The deportment, while in office, of Prime Minister Manmohan Singh is perhaps already a case study globally on how the so-called head of a nation maintained a mystical silence almost throughout his tenure, even during the most critical situations.
No wonder that policy paralysis is one of the major terms that is used by many economists to describe his tenure. If Mr Singh was perversely silent, then some of his other loud-mouthed party people and even those in Opposition, have been perhaps as perversely corrupt, as has been evidenced in the past eight years. In effect, Indian politicians per se have shown the world what never should be done while leading a nation.
Compared to these ignominious political examples, there are still stalwarts in our bureaucratic system, who single-handedly are attempting — and in many cases succeeding — to change the outlook of India. One such person is Reserve Bank of India Governor Raghuram Rajan. With each passing day, given the evidence of his fantastic and growing command over the Indian economy and his deepening understanding of how to make India a better place, one feels convinced that if India perhaps had to hand over the reins of its economy to any person, there’s no better a choice than Mr Rajan. We would be far better off than where we would be reposing our faith in the bunch of politicians fighting it out inside Parliament.
Mr Rajan took over as the Governor of RBI in September 2013. look at how his focussed efforts in the past eight months have reaped benefits in such a short span of time. The inflation rate for 2012-2013 was 10.2 per cent. The same for 2013-2014 has come down to 9.5 per cent. In March, this year, the rate had come down to 8.31 per cent. The wholesale price index inflation is now at sub five per cent rates. It’s taken Mr Rajan just around three quarters of a year to do what the Government could not do in the past so many years. In August-September 2013, the rupee was at its historical lowest and foreign exchange reserves had crumbled to a three year low. Mr Rajan’s brilliant policies ensured that not only did the rupee gain back the lost sheen, forex reserves have also grown by more than 10 per cent to cross the figure of $300 billion last month. Mr Rajan managed to curtail the current account deficit for 2013-2014 to around $35 billion, compared to $88 billion last year.
As per various reports, the merchandise trade deficit for 2013-2014 is 25 per cent lower than that of the previous year. The GDP growth rate, which had touched the nadir of four per cent, is creeping up each month. Mr Rajan confidently stated this month that it would cross five per cent very soon. The International Monetary Fund supports this contention, forecasting that India’s GDP growth will cross six per cent in 2015. Truly, such improvements in economic indicators in such a short span of time are unique. Analysts, globally, are praising Mr Rajan for these improvements.
It is rare for a bureaucrat to be praised by both the ruling Government and the Opposition. One famous statement of Mr Rajan stands out: “There is no reason that India’s growth cannot regain double digits. Simply moving our millions from low productivity agriculture to rural industry or services will give us growth for years to come, provided we are willing to do the minimum necessary to collect the low hanging fruit.” One wonders why there is no politician who can confidently stake his claim to such objectives. No prizes for guessing why no one hears about the Union Minister of Finance anymore. Without doubt, today the Indian economy is being led single-handedly by Mr Rajan.
(The writer is a management guru and honorary director of IIPM think tank)