20.6.16

RRRexit bad omen for Indian economy, image

Calling RBI Governor Raghuram Rajan's decision to not seek a second term a `bad omen' for the Indian economy, eminent economists and former policymakers said it will be seen by the world as India's non-approval to a policy against inflation and bad loans.
Rajan's colleague at Chicago University Booth School of Business Luigi Zingales termed it is a “huge loss for India“, while Harvard University professor Gita Gopinath said it was “deeply disappointing“ that the government instead of fighting hard to keep Rajan has let him go amid all the distasteful comments by those questioning his commitment to India's best interests.
Indian-origin economist and British Labour Party leader Meghnad Desai said he feels “sorry for India's reputation abroad“, while World Bank's Chief Economist and India's former Chief Economic Advisor Kaushik Basu said Rajan has been one of the finest central bank governors.
Fifty-three-year-old Rajan, with a reputation to have rightly called the 2008 global financial crisis, on Saturday made public his decision against a second term after his current tenure ends on September 4, 2016.
Rajan, the on-leave Professor of Finance at Chicago Booth School, said he would return to academia, but would be ready to serve India again in future.
This is being seen in some quarters as his unhappiness over the way things have developed in recent months with regard to a barrage of personal attacks on him from some quarters and the government reaction to that.
Echoing the sentiments of various top industry leaders from India, who termed Rajan's exit as `nation's loss', the economists from abroad and the former policymakers back home said it can prove to be “very costly“ for Indian economy.
Gopinath told PTI history will judge Rajan as one of the most effective central bankers of not just India but of the world“.
Desai said it is a pity that Rajan decided to go and the task of his successor, whoever he or she is, will be very difficult. “I am not surprised but sorry for India's reputation abroad. He was criticised for doing what a central banker has to do. It will be seen by the world at large that an anti-inflation policy, a policy of cleaning up nonperforming assets of banks and being tough on banks' balance sheets are not policies which meet with approval in India.“
Former finance secretary Arvind Mayaram said the development would be very costly for the economy. “Raghuram Rajan's decision not to seek second term would be very costly for the economy. Not a good omen,“ Mayaram tweeted.
Former deputy governor Rakesh Mohan said there must be a stability at the top in the central bank and favoured a minimum five-year tenure to push reforms properly.
Mohan, whose name is also doing the rounds as a probable contender to succeed Rajan, however, said it is “premature to discuss“ the issue.
“It is extremely important to have stability at the top of the central bank and is to be taken something as important. The governor and deputy governors should be given at least, may be, a five-year term to run the reforms well,“ Mohan told a TV channel.
He said most central banks across the world have around 5-7 years of tenure for the governor and deputy governors.
Continuing his tirade against the RBI boss, Rajya Sabha member Subramanian Swamy said Rajan has been acting as a “Congress agent“ ever since the BJP came to power in May 2014.
Swamy's remarks came after Congress leader Ghulam Nabi Azad said that he was saddened by the way an “upright“ RBI Governor was being targeted by BJP MPs.
The BJP MP responded: “This only proves what I have always suspected...that he [Rajan] worked as a Congress agent.“ He accused Rajan of “sabotaging the country's economy by trying to put all small, medium industries out of business“.












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