“I want to share with you that I will be returning to academia when my term as Governor ends”, Rajan wrote in a message to staffers that was posted on the central bank’s website. A decision on his successor would be announced shortly.
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Rajan earlier today said he will be returning to the academia after completion of his term as RBI Governor on September 4. Speculation has been rife over whether Rajan would get a second term after BJP leader Subramanian Swamy launched a no-holds barred attack on him recently accusing him of destroying economy with his hawkish stance on interest rates.
India’s central bank chiefs are appointed by the prime minister in consultation with the finance minister. Rajan’s credibility came as much from his questioning of Alan Greenspan at the height of the latter’s popularity to the fact that, unlike many of his predecessors, he came armed with a clear plan, not just in terms of deepening the country’s financial markets but also for tackling the massive beating the rupee was taking in the weeks prior to his appointment.
What did Rajan in, probably, were intemperate statements which, while in the nature of broad philosophical theorizing, did look unduly critical of government, something few other central bankers of repute have done in countries like the United States or the UK.
The question of whether Rajan would seek – or if he would be granted – a second term has been the subject of intense speculation in India. Rajan, who became the 23rd Governor on September 4, 2013, pointed out that the work on operationalising the monetary policy committee (MPC) which will take the inflation-targeting framework ahead, and the clean-up of bank balance-sheets as unfinished agenda. “What about charges levelled by Swamy against Rajan. We don’t select employees on the basis of popular vote”. “The Prime Minister and Finance Minister should explain if they agree with it or they let down Rajan”.
India Inc led by Anand Mahindra, Deepak Parekh, NR Narayana Murthy, Kiran Mazumdar-Shaw, Mohandas Pai hoped that Rajan’s successor will continue with the “good work” he did, although industry chambers CII and FICCI declined to comment. “He leaves a legacy of economic stability”. Before that, between 2003 and 2007, Dr. Rajan was the Economic Counselor and Director of Research at the International Monetary Fund (IMF). “India is a big country with a billion people so nothing matters can not be the logic all our lives”.
Infosys’ Indian-origin CEO Vishal Sikka said Raghuram Rajan has been “outstanding” as RBI Governor and he being a green-card holder should not be an issue. I am sure the work we have done will enable us to ride out imminent sources of market volatility like the threat of Brexit.
“Dr Rajan has given RBI a very large measure of credibility,”SBI Chairperson Arundhati Bhattacharya said”.
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In his three-year stint at the central bank, the vocal Rajan has regularly given candid speeches and often chose his favourite ground of ideas- academic institutions -for speaking his mind on key issues.
