Rajan, who refused to accept a second term at helm of the Reserve Bank, today sought to defend his stance in all these instances and stressed that he was within his remit as the central bank governor while making those remarks.
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Rajan, who will return to academia after his current three-year at RBI tenure ends on September 4, had started-off his stint here with a couple of rate hikes, which earned him blame from certain quarters as an inflation hawk. He said, “Whenever we’ve had to say “no”, I was never anxious about re-appointment or future prospects”.
The latest policy statement continued to stress liquidity management, a systemic clean-up of the banking sector, and the fight against inflation, which were the hallmarks of Rajan’s tenure. Some of the (recent) attacks were ad hominem, that is imputing sort of motives and alleging things completely without any basis; those I just put aside.
Talking about the FCNR-B window, which matures towards the end of his term, Rajan said that he does not expect outflows to be materially disruptive to the financial system.
At his last policy review as head of the Reserve Bank of India, Raghuram Rajan kept key interest rates unchanged on Tuesday to cool inflation running near two year highs, while also pushing for policy panel to be formed in time for a review in October. “But that does not that mean that I was absolutely, what is the right way to say it, hellbent on a second term”.
“Whenever we’ve had to said no, I’m not anxious about criticism or a job in (the) government”. As we can see, both have fallen quite a bit from September 2013, when Rajan took over the reins at the central bank. “I don’t think there is any doubt that neither will the government nominees on the MPC turn out to be toeing the government line, which is the fear being expressed, nor will the RBI representatives toe the Governor’s line so that it becomes a fight between the Governor and the government”. Responding to a ques tion on what would have kept him back, Rajan said “There was a process of dialogue with the government and dialogue eventually didn’t reach a place where we could agree that I would stay on”. “I think the path is clear and there has been substantial cooperation all along the way between the government and the RBI on this”. “I feel, I have done what was needed to be done, if they had such power they would have stopped me (from doing) what was needed”. When asked about his response to the critics, he said: “I have nothing to say critics are there all the time”. Citing the example of Malaysia, which adop-ted similar tax, Dr Rajan said, “There was an inflationary imp-act, but it was short lived”.
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In an exclusive interview to CNBC TV18 he said, “I want to implement ideas and reforms. But everything I wanted to do was structured for a three year horizon”, he said.
