Keep speculating, says Rajan on reappointment

Reserve Bank of India governor Raghuram Rajan ribbed the media today about the string of reports on whether he will be reappointed after his term expires. "It would be cruel of me to spoil the fun the press is having," Rajan said, adding that he is "intrigued by the letters I am supposed to have written."

Last week, a report in a major regional newspaper said that Rajan, 53, had written to Prime Minister Narendra Modi to say that he does not wish to remain at the central bank and would prefer to go back to the United States after his three-year term expires in early September.

News agency Reuters has said that top government sources indicate Rajan will be retained as RBI chief, should he wish to stay on. Rajan has previously declined to say whether he would accept such a reappointment, saying it would be speculative to discuss.

Rajan, a University of Chicago professor, has been popular with foreign investors who have enthusiastically cheered him for his efforts to lower inflation and clean up state-run banks' massive bad loans.

But he has also attracted the opposition of some politicians and finance ministry officials for his reluctance to cut interest rates to stimulate growth.

"Rajan will get another term and he will accept it," said Arvind Mayaram, a former finance secretary who Rajan worked with closely first as the government's chief economic adviser and then as RBI governor. "He is well entrenched in India's political economy," NDTV quotes him as saying.

Government sources have made it clear that the decision rests with Prime Minister Narendra Modi. The Prime Minister is not revealing his cards, recently telling The Wall Street Journal that Rajan's reappointment would come up only in September.

Bharatiya Janata Party parliamentarian Subramanian Swamy has written two letters to PM Modi demanding Rajan's removal, accusing him of "wilfully and deliberately wrecking the Indian economy".

Rajan's forthright comments have often left the media agog, for instance his appeal for social tolerance late last year was perceived to be a veiled criticism of the government. He recently compared India's fast-growing economy to a "one-eyed king in the land of the blind". Commerce minister Nirmala Sitharaman publicly censured him for his comments.