Chidambaram backs 'outstanding' Rajan

Chidambaram backs 'outstanding' Rajan

Chidambaram backs 'outstanding' Rajan

Former finance minister P Chidambaram on Saturday came out in support of RBI Governor Raghuram Rajan, calling him “one of the most outstanding economists” in the world. 

But the big question, he said, is whether the current government deserved to retain Rajan or not. 

“I am beginning to wonder whether this government deserves Rajan,” Chidambaram said, when asked whether he should be given a second term. Rajan's three-year term ends in the first week of September.

He, however, parried questions on BJP leader Subramanian Swamy’s attack on Rajan. He said the Congress would respond only if Prime Minister Narendra Modi or Finance Minister Arun Jaitley spoke against Rajan. 

On Friday, the Congress dubbed Swamy’s attack against Rajan ‘fascism’, and said it was an assault on the institution and not the individual.

Defending Rajan, he said: “The UPA government appointed one of the most outstanding economists of the world as RBI governor. We placed full confidence in him at that time and continue to place full confidence in him today.” 

In a letter to Modi two days ago, Swamy had sought Rajan’s ouster, charging that his insistence on high interest rates had led to recession in the domestic small and medium industries, causing not only a sharp decline in output, but also massive unemployment of semi-skilled labour.

To a query whether as finance minister he had reservations about Rajan's stand on interest rates, Chidambaram said the UPA government had the best of relationship with all Central bank governors, including the incumbent.

“The world over, the finance minister and Central bank governor engage in such a dialogue that it does not mean the minister questions the competence of the RBI governor. Each one approaches economy from his or her own perspective. The government's perspective is growth. The Central bank's perspective is monetary stability,” he said.

Releasing a booklet “Two Years of Failed Promises & Lies of Modi Govt”, Chidambaram said there is good reason why the mood of the people is sombre and sullen. “Helped by low fuel prices, the CPI (consumer price index) came down from 6.7% in June ’14 to 3.5% in July ’15. It has since risen to 5.4% in Apr ’16,” Chidambaram said.