Published: orissadiary.com | June 21, 2016 | Rasananda Panda
The financial world is up for a turmoil on Monday morning. Definitely in India. Dalal Street is likely to see a blood bath and market may halt for some time. In Luteyn's Delhi and specifically North and South Block will see a flurry of activities in the week. Given the reactions of top bankers, CEOs and other top professionals from the money and capital market not only in India but also from the other parts of the world, the exit of RBI Governor Raghuram Rajan is not timely, desirable and could have been avoided. This is more important given his performance and the stage at which the Indian economy is now - in the brink of a new era - where the commercial banks are facing the greatest cleansing of their balance sheet and the economy moving to a formalised inflation targeting regime where the quantum of inflation will be a political call and the RBI will merely strive to maintain it with all its weapons. Leave aside the fact that all macroeconomic indicators of the economy are doing great with a GDP growth of around 7.8 percent, all time high foreign exchange reserves of 360 billion dollar, a stable rupee against all major foreign currencies of the world, low retail inflation around 5 percent, low current account deficit, highest FDI during previous fiscal and moreover from being "Fragile Five" economy when Rajan took over in 2013 to the fastest growing economy in the world. The performance record of Mr. Rajan, thus, is unquestionable. Accepted, agreed by all including his detractors-if any-in professional field.
Then, why he preferred to quit? At heart he is an academician. Academicians are known for their self esteem than the position and power. They have a view that they always express - be it right or wrong. They believe, that, it is safe to be unpopular in a free society than to be popular in a restricted environment and society. They are the persons who wants thing to be given to them on their merit and at most appropriate time and not to beg or solicit for it as most bureaucrats or politicians do especially at the time of their reappointment or fresh term. In his voluntary exit at the peak of his career as a performing academics in administration, he delivered a message to PM and others at the helm of affairs - do not think academicians and professionals are available at arm's-length to manipulate. An academician wants to be known for his work not for his pedigree as regards to citizenship, loyalty or political affiliation and etc. The wide-spread discussion- less about his role and function as a governor- but more about his citizenship, doing favour to crony capitalist might have irked him who, any way, has all the requisite professional pedigree to be given with assignments anywhere in the world given the global economic conditions. But, here again, comes his interest to return to academics where one finds solace after all the hounding you receive in public life while heading Institutions of national and international repute and if it is in India it speaks volume of it. Secondly, it is in academics you get a chance to reflect upon what you did and what you could have done better. And if you are 53 years old, going to an ace business school at University of Chicago where you have worked and your colleagues, students will be eager to listen and learn from your policy making sojourn in a country like India, it is definitely more satisfying and magnanimous than waiting for a bureaucratic announcement regarding your reappointment when you have delivered and all those matters in taking a decision are convinced about your performance. Mr. Rajan, you are going to be a pride and role model for young, budding, meritorious and even otherwise also to academicians of the world who aspires to traverse the path of academics and public policies i.e. theoretical as well as applied economics and finance in this case.
Mr. Rajan was the 23rd governor of RBI and perhaps the fifth career economist after IG Patel, Manmohan Singh, C Rangarajan, Bimal Jalan. All these people were known for their impeccable record as RBI governor. All of them either served the government or were with RBI for a long time before becoming the governor. In Rajan's case, it is merely a short stint as Chief Economic Advisor with the North Block and his performance brought him to this post and true to his credibility - he performed and delivered. Never to forget his stint at IMF as Chief Economist. Further, it merits mention to state that he was the first to predict the coming global financial crisis of 2008 in his now-famous book the Fault Line. Most of his early predecessors (after 1992) were given with extensions and were serving for more than five years at Mint Street ( RN Malhotra and Bimal Jalan served close to six years as RBI Governor). So an extension quiet ahead of time for Mr. Rajan would have been a logical eventuality than a bureaucratic process to demean the position and that to when you have a star performer in the form of Mr. Rajan. Elsewhere in US, Alan Greenspan served for 19 years as the Chair of Federal Reserve Bank.
RBI governors are not supposed to win votes and facebook likes or twitter followers. But you have around 60000 well wishers who filed an online petition to government for your continuance. You have a fandom of around two lakh fifty thousand (250000) while your all powerful counterparts in US(Janet Yallen) and Europe (Mario Draghi) are not having more than 10000 put together. Needless to mention you were one of the ever charming RBI governor that India had.
Yes, we appreciate - you are Mr. Rajan. You do things in your own way.