Would have stayed longer, but agreement proved elusive: Rajan

02 Sep 2016


Reserve Bank of India, governor Raghuram Rajan Days before leaving the Reserve Bank of India, governor Raghuram Rajan today said he had been willing to stay a bit longer but could not reach the "right kind of agreement" with the government on extension of his tenure.

"Because of ... unfinished task, I was willing perhaps to stay provided we could reach the right kind of agreement; we didn't. That's where it ended," said Rajan, whose outspoken views on various issues were often seen as being against the views of the government on economic and even non-economic matters. His three-year term ends on 4 September.

In an interview on India Today channel, Rajan defended his controversial speech on perceived growing intolerance in the country, which had riled the government.

Rejecting criticism of having spoken 'out of turn' on various occasions, Rajan said it was "legitimate duty" and "moral responsibility" of public figures to tell young minds what good citizenship is about.

The former chief economist of the International Monetary Fund said he wanted a second term at the central bank to complete his unfinished task "but just didn't reach an agreement" with the government on that.

"There were a variety of places where differences may have been in terms of horizons and this and that. I think we just didn't reach an agreement where ... remember my term came to an end, so it had to be a new term," he said.

Rajan was asked if he wanted a second term and what kind of consultations he had with the government on a further tenure. "We started the dialogue and we were going along that path but essentially we agreed at some point that it did not make sense to pursue the dialogue further," he said.

Rajan said he was engaged in a dialogue with the government "whether it made sense for me to continue".

"When I got into this job, I saw this as a three-year term. I also realised or recognised I needed to go back to academia. Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back. Question was how much time," he said.

Asked if he was disappointed, Rajan said, "In terms of unfinished tasks, it is always good to finish and look back and say I have sealed and signed it.

"Everything comes to an end at some point and you have to move on. Right now my focus is let us look ahead and see what's need to be done and not look back," he said.

Several RBI governors before Rajan including C Rangarajan, Y V Reddy, Bimal Jalan and D Subbarao got five-year terms.

On inflation, Rajan said he was hopeful that inflation would fall below 6 per cent, a level that was breached in the previous month, while adding that the data should be awaited for August - the last full month of his tenure.

Asked if he had intolerance within Bharatiya Janata Party and Sangh Pariwar in mind when he made the controversial speech at the Indian Institute of Technology-Delhi in October last year, Rajan said, "No. I had the environment certainly at the back of mind where there was a discussion certainly about tolerance. It was a topical issue.

"But a week after I gave the speech, I met a cabinet minister who said he had been saying exactly these things. So it wasn't as if it was anti-government. Which government is going to preach intolerance?" he said.

Rajan appeared to blame the social media for taking away from speeches "what it wants to hear".

"I think the way the speeches are sometimes interpreted, when you read the speeches it comes out the way the criticism appears," he said.

Stating that the reporting of the speech was that it was an anti-government speech about intolerance, he said, "The actual content of the speech is a plea for tolerance because it is in the best tradition of India and continuation of tradition into the future. It was not about saying we have an intolerant environment. It was a plea for continuing our tradition."

He, however, did not agree with the question about his speech being misquoted and said communication is a continuous process and often ideas have to be repeated and re-emphasised.

Rajan said he did not talk about a "rising tide of intolerance".

"I talked about need for tolerance going forward if you were to have an economy based on ideas, based on engagement, based on dialogues and that was in a speech at the IIT Delhi convocation.

"When you are talking to young minds, and you are trying to tell them about a future we want to aspire to, you draw on a history of tolerance in the past and you tell them this is where we should be and this is where we should be going," he said.

The RBI governor said in his opinion that speech was not "stepping out of bounds".

"I think that is the legitimate duty, in fact the moral responsibility, of the public figure who has the attention of young minds, to tell them this is what good citizenship is about, this is where we should be going.

"I have absolutely no regrets about saying it. If people think that was a criticism of the government, I think they should revisit what is in that speech and what any government would say about what its moral duty is," he said.

Stating that in such lectures one talks about topical issues, he said, "but you engage in a way which is apolitical, which is about the best interest in our democracy and I think that is absolutely legitimate."

On his post-retirement plans, Rajan said he is going to take a break from public speaking for some time as it was important for his successor Urjit Patel at RBI to get some space.

"So when I move out, I will stay out for a little while," he said. "I actually want to learn a little more about certain aspects of the country and travel around a little bit ... I will pop back in. I will work with informal structure ... this is an exciting, vibrant, large, immensely interesting country and there is absolutely no reason why I should stay out."

On advise to his successor, he said Patel knows how to do things and has also been handling some of the relationships with the government for some time. "And I have confidence he will manage it going forward. So I have no advice that will be of any use to him. I have briefed him on all the issues we are dealing with, but he has his own mind," he said.

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