PM to decide on 2nd term for Rajan

Remove RBI chief, says Subramanian Swamy

 Prime Minister Narendra Modi will decide on whether to give a second term to Reserve Bank of India’s Governor Raghuram Rajan.

Rajan’s tenure will end in September. The focus has been on Rajan’s second term ever since senior BJP leader Subramanian Swamy openly questioned his credentials. Swamy on Tuesday wrote to the prime minister seeking Rajan’s removal.

“I cannot see why someone appointed by the UPA government, who is apparently working against Indian economic interests, should be kept in this post when we have so many nationalist- minded experts available in this country for the RBI governorship,” Swamy said.

Swamy criticised Rajan primarily for his restrained approach to interest rate reduction in his fight against inflation. Swamy has found it “disastrous”.  He also charged Rajan with not being “fully Indian”.

However, soon after shooting the letter to Modi, Swamy came under sharp attack from Congress leader Jairam Ramesh who wanted him to attack Finance Minister Arun Jaitley for all the wrong in the economy and not Rajan. Economists and analysts too were quick to respond through articles and on Twitter against Swamy’s views.

“Why Swamy does not hit his real target Finance Minister Arun Jaitley but set up dummy targets like the RBI Governor who cannot speak out,” Ramesh asked.

Official sources, however, indicated that Rajan’s chances of retaining his post were still bright. “Rajan has the prime minister’s support because he is trusted by the market,” said an official.

Another said that Swamy appears to be the lone voice. Yet another view was that rapidly changing policies can confuse markets and derail reforms.

Jaitley also has clarified queries about his ministry’s relationship with the governor, saying the ties were very mature and that there was nothing amiss.

Critics of Rajan have become more vocal ever since his “one-eyed king” remark about Indian economy hit the headlines of news dailies. Rajan had said this on a foreign land though he clarified his remark subsequently. The former IMF chief economist and professor at Chicago University took over as RBI Governor in September 2013.