India's high-profile RBI governor is likely to come under political pressure to retreat from his hawkish stance on inflation if Narendra Modi wins power in the general election.
Strategists in Modi's Bharatiya Janata Party (BJP), confident that his jobs-first policy pitch will secure a strong voter mandate, suggest that they would prefer to have one of their own at the helm of the Reserve Bank of India (RBI).
That sets the stage for a confrontation with RBI Governor Raghuram Rajan, who since being appointed last September has enjoyed an unusually smooth ride in a country where governments often treat the RBI as a punchbag for their own policy failings.
The former International Monetary Fund chief economist is widely viewed as India's most capable technocrat, winning the respect of investors for his handling of a currency crisis that hit Asia's third largest economy last year.
"It will be a big loss of face for the country and would create a negative perception among foreign investors if BJP removes the governor immediately after forming the government," said A Prasanna, an economist at ICICI Securities Primary Dealership Ltd in Mumbai.
Before moving to RBI, Rajan, 51, served as chief economic adviser to the finance ministry under the Congress-led government, which opinion polls say faces defeat in the elections starting Monday. BJP treasurer Piyush Goyal has attacked Rajan over a series of interest rate hikes intended to curb inflation, now running at double the RBI's longer-term 4 percent target.
Rajan has raised the repo policy rate three times by 75 basis points to 8 per cent.
Subramanian Swami, a BJP ideologue and former cabinet minister with close ties to a Hindu grassroots movement that has shaped Modi's thinking, puts it more bluntly: "We can make it worthwhile for him to leave," Swami told Reuters.
"I would not be surprised if a government led by Narendra Modi removes the governor," said Satish Misra, an analyst at the Observer Research Foundation, a Delhi-based think-tank. "Modi does not brook any opposition."
Good cop, bad cop. Analysts interpret the verbal broadsides as a softening-up exercise intended to secure greater RBI compliance with Modi's expansionist credo.
Rajan has moderated his rhetoric on inflation but analysts said that is more a response to cooler inflation than anything else.
However, Arun Jaitley, tipped to assume either the finance or home affairs portfolio in the next government, said in a TV interview last month, "If someone is doing good job, he will certainly continue."