There is more to RBI than governor: Rahguram Rajan
20 June 2016
The Reserve Bank of India governor Raghuram Rajan, who finally killed media speculation over his future at the central bank, said that the institution as he knows it will survive not only himself but any governor. He added that he had never tried to personalise the office of RBI governor.
''The Reserve Bank of India will survive any governor and it is important not to "personalise this office", Raghuram Rajan had told The Economist magazine days before he announced his decision not to seek a second term .
"What is important is to not personalize this office. It will survive any Governor, it is bigger than any Governor," The Economist magazine quoted Rajan as saying in its latest edition.
Rajan, a former IMF chief economist who is credited with having predicted the 2008 global financial crisis, has, however, been exceptionally adept at recognising the banking sectors' woes, which perhaps led to his fall out of favour with political leaders.
While Rajan has been hailed as the 'rockstar central banker' ever since assuming office of RBI governor in September 2013 (See: Raghuram Rajan takes over as RBI governor) and for containing rupee volatility amid global market uncertainties, he has been steadfast in fighting inflation and facilitating economic growth.
Rajan has been praised by both corporate and economists for containing inflation to a large extent and for forcing the banks to do a "deep surgery" to clean up their books of bad loans. At the same time, he has also been criticised by some quarters for his hawkish monetary policy stance and refusing to heed to demands for lowering interest rates to boost the economy.
He has taken a firm stand against rising bad loans of state-run banks and has been less flexible in interest rate policy – something that the politico-corporate lobby that controlled the functioning of commercial banks could not digest.
He has acted in a civilized manner in refuting criticism by telling his associates and RBI staff in a "Message to RBI staff " that he would return to academia after the end of his current three-year tenure .
It said Rajan "need not even leave his office atop the Reserve Bank of India's tower in Mumbai to gauge two factors central to India's prosperity".
The Economist quoted him as saying while looking down, the ships sailing to nearby docks provide clues as to the buoyancy of foreign trade - "The imposition of steel tariffs earlier this year, a knock-on effect from China's slowdown, all but stopped traffic for a time".
It further said Rajan "favours incremental reforms over wholesale ones. He has made it easier to move money in and out of India, but not abolished capital controls in the way you might have expected from a former IMF chief economist".
Rajan also knew that the Indian banking system has been in junk stage and the whole system was corrupted as loan were given on project reports, which were fully manipulated to suit loan conditions, with political backing.
But, in the three-year period he has been at the RBI's helm, Rajan has done whatever he could to clean up the banking system and prop up the economy.
While the list of possible successors of Rajan is too lengthy, reports quoting senior officials at the RBI state that the list of potential successors could include RBI deputy governors Urjit Patel and Subir Gokarn, SBI chairperson Arundhati Bhattacharya, and former bureaucrats Vijay Kelkar, Rakesh Mohan, Ashok Lahiri, and Ashok Chawla.