<p>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.<br /><br /></p>.<p>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).<br /><br />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.<br /><br />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.<br /><br />"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.<br /><br />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.<br /><br />Rajan has raised the repo policy rate three times by 75 basis points to 8 per cent.<br /><br />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.<br /><br />"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."<br /><br />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.<br /><br />Rajan has moderated his rhetoric on inflation but analysts said that is more a response to cooler inflation than anything else.<br /><br />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."</p>
<p>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.<br /><br /></p>.<p>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).<br /><br />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.<br /><br />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.<br /><br />"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.<br /><br />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.<br /><br />Rajan has raised the repo policy rate three times by 75 basis points to 8 per cent.<br /><br />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.<br /><br />"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."<br /><br />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.<br /><br />Rajan has moderated his rhetoric on inflation but analysts said that is more a response to cooler inflation than anything else.<br /><br />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."</p>