Raghuram Rajan deserves second term at RBI: Princeton University economist

Recently, PM Modi said the issue of reappointment of the RBI Governor was an administrative subject and it should not be an issue of interest of the media.

By: PTI | New Delhi | Published: June 5, 2016 1:00 pm
Raghuram Rajan, Rajan, RBI, RBI governor, RBi governor Raghuram Rajan, Rajan's reappointment, Raghuram Rajan re-appointment, BJP, Princeton University, IMF, Subramanian Swamy, Raghuram Rajan's second term, business news If denied extension, Raghuram Rajan will be the first RBI Governor since 1992 to not have a five-year term. (Express Photo by Tashi Tobgyal)

Backing a second term for RBI Governor Raghuram Rajan, leading Indian-American economist at Princeton University Avinash Dixit said the apex bank chief should have “full operational independence” when it comes to pursuing targets on employment, growth and inflation.

When asked whether Rajan should be given extension, Dixit told PTI, “Yes, definitely. I think Raghuram Rajan deserves a second term as the RBI Governor… he should have full operational independence in pursuing targets (inflation, employment or growth).”

Rajan, who was appointed by the previous UPA government for a three-year term that began on September 4, 2013, has been under attack from some quarters of BJP, including its Rajya Sabha MP Subramanian Swamy, for what they term as his failure to lower interest rates and boost economic growth.

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A former chief economist at the International Monetary Fund (IMF), Rajan is currently on leave from the Chicago Booth School of Business, where he holds the post of Distinguished Service Professor of Finance.

As an outspoken RBI Governor, Rajan has expressed his views on host of issues, including intolerance and has even described India as ‘one-eyed king’ in the land of blind in reference to the country’s high economic growth.

If denied extension, he will be the first RBI Governor since 1992 to not have a five-year term.

His predecessors D Subbarao (2008-2013), Y V Reddy (2003-2008), Bimal Jalan (1997-2003) and C Rangarajan (1992-1997) had five-year terms.

Recently, Prime Minister Narendra Modi said the issue of reappointment of the RBI Governor was an administrative subject and it should not be an issue of interest of the media.

Rajan, who after taking over raised the short-term lending rate from 7.25 per cent to 8 per cent and retained the high rates throughout 2014, began the process of lowering the rates in January 2015. He has since then cut rates by 1.50 per cent to bring down to 6.50 per cent.

Last month, the Parliament passed Finance Bill 2016 which contained an amendment to the Reserve Bank of India Act of 1934 giving the central bank a mandate to target inflation.

The six-member monetary policy committee (MPC), which will include RBI Governor and three nominees of the government, will set interest rates to bring consumer or CPI inflation to pre-set targets.

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  1. A
    Jun 5, 2016 at 4:23 pm
    It will be virtual suicide for bjp if RR is given 2nd term he is alone sufficient to de stablize the government economic development agendas and has caused much more damage to the Modi government than entire opposition together could have done he has done very smartly in last two years. BJP will certainly loose 2019 election if RR is given 2nd term and I have no doubt what so ever in this regard.
    1. B
      Jun 5, 2016 at 10:06 am
      Avinash Dixit: Come back and work in India, for India, then voice your voice. Else, you are simply another fellow supporter of an academician. I am sure, there are BIG vestested interest groups running this lobby propaas. Govt must be careful about the issue.
      1. Srivathsan Madhavan
        Jun 5, 2016 at 2:23 pm
        I am an ordinary Indian Citizen and I really don't care whether RR gets a second term or whether RR is indeed guilty as charged by Dr. Swamy. But never do I remember seeing so much public lobbying - especially from outside the country, for RR's extension. As our PM rightly pointed out, the case of RR's extension (or not) is an internal administrative matter yet there are so many external agencies trying their best to influence it. And that's really making me uneasy.
        1. S
          Jun 5, 2016 at 5:37 pm
          In many instances, Modi Sarkar acts like a goat: It gives milk but with a generous load of pee in it. A lot of things that can be handled routinely in a dignified way, the NDA reduces them to a game of political football - kick the ball and let it go where it may. By all accounts Rajan has done a good job, and so it should have been a no-brainer to extend his term. But then how would the ego of politicians be served? They have to feel they are the lord and master of the universe, arbiter of each and every fate.