Rajan goes on back foot on 'one-eye king' comment

After coming under attack from Finance Minister Arun Jaitley for his "one-eyed king" comment on India's growth rate, Reserve Bank of India (RBI) Governor Raghuram Rajan on Wednesday seemed to offer the peace pipe to the Centre saying that the country's current growth rate reflects the hard work of the government.

“Current growth reflects efforts of government, people,” Rajan said, while at the same time apologising to the visually impaired for his earlier statement.

“I want to apologize to a section of the population, the visually impaired, who might be hurt by my statement. My intent in saying 'One-eyed King in the land of blind' was to say that our outperformance is in the midst of global weakness,” Rajan clarified while addressing the 12th convocation of the National Institute of Bank Management, Pune.

Jaitley had on Tuesday objected to Rajan's comment on India's growth saying that a 7.5 percent growth rate for any other country would have meant a “celebration”.

Rajan, however, added that India's growth rate, though commendable, should not lead to euphoria as the potential for further growth is undoubtedly high.

“India is the fastest growing large economy in the world. But as a central banker, I cannot get euphoric with India's economic growth rate as it is at the cusp of substantial pick up in growth. I see scope to grow faster given capacity utilisation and agricultural output," Rajan said.

“India has a long way to go to boost per capita income,” he added.

Referring to the current status of public sector banks in the country, Rajan said: “RBI has offered all help to Bank bureau in reforms.”

The earlier comment from Rajan, who often comes up with some eyebrow-raising one liners, had not gone down well with the central ministers. First Commerce Minister Nirmala Sitharaman said she did not approve of his use of words, followed by an observation from Minister of State for Finance Jayant Sinha.

Sitharaman had countered Rajan's comment saying: "I may not be happy with his choice of words. Whatever action is being taken by this government is showing results. Foreign direct investment is improving. There're clear signs manufacturing is reviving. Inflation, current account deficit is under control."

Sinha said: "We are the shinning star. I don't agree with what the governor said."

Rajan's remark -- "I think we have still to get to a place where we feel satisfied. We have this saying -- 'in the land of the blind, the one-eyed man is king'. We're a little bit that way" -- had raised eyebrows among central ministers.

Jaitley was on Tuesday also asked if his government intended to give Governor Rajan, whose term expires in September, an extension. "I don't think we discuss these matters in the media or publicly. It is not proper to make comments on this at all," Jaitley responded.

But the finance minister did not deny the governor his due. "I think the Reserve Bank has done fairly well in the last year, year-and-a-half. It was confronted with a situation where you had near double-digit growth and that growth led to a situation of high interest rates," he said.