Jagdish Bhagwati bats for RBI governor Rajan

Eminent economist Jagdish Bhagwati, who is widely expected to don the mantle of adviser to the Narendra Modi-led government on Monday advised the Bhartiya Janata Party to retain Rajan as the head of the Reserve Bank of India and do nothing to deviate from the reforms path initiated by former prime minister Manmohan Singh.

"The astonishing triumph of Narendra Modi in the greatest election ever held puts India back on the map," a PTI report quoted Bhagwati as saying.

Bhagwati also advised the new government to hold monthly press conferences to articulate its agenda and to have a better rapport with the central bank in policy making, the report stated.

"Unlike the UPA leaders, the new PM, who is not tongue-tied, should hold monthly press conferences where he can bring his agenda and actions before the public and carry them with him. He was wonderfully articulate during his campaign; he can do no less now that he is the prime minister," he added.

"I also believe that he (Modi) ought to keep Raghuram Rajan. He is a major economist who commands international respect as well," the Columbia University professor said.

There has been speculation that the Modi-led government could change the RBI governor.

Rajan had recently asserted the independence of the central bank. "I determine the monetary policy. I say what it is. The government can fire me, but the government doesn't set the monetary policy. So, in that sense, am I independent. Well, I am happy to talk to the government. I am happy to listen to the government but ultimately the interest rate that is set is set by me," he said at St Gallen Symposium in Switzerland.

Bhagwati said the new prime minister will have many brilliant economists to draw on and many abroad want to go back to help. "Arvind Panagariya is an obvious choice for the top advisory position. He has written forcefully and with great insight on most of the issues before the country and has stood his ground successfully, with facts rather than assertions, against bigger names," he added.

Bhagwati named economists such as Bibek Debroy, Shankar Acharya, T N Srinivasan and Easwar Prasad, on whom Modi can rely on.

Referring to sceptics who say they have "anxiety" about Modi's secularism, Bhagwati said: Perhaps the only cure for it is to take Valium or Xanax, since nothing else will reconcile them with the electoral outcome and the fact that nothing culpable has ever been found against Modi for the 2002 riots."

The Modi-led BJP won 282 seats in the just-concluded general elections in the house of 543. The party and its allies have cornered 336 Lok Sabha seats.