Raghuram Rajan has only himself to blame for working with Modi
Last Saturday (June 18), ending long speculation, India’s "rock star" Reserve Bank of India governor Raghuram Rajan confirmed that he will step down from his post early September and return to academia. The letter, which he wrote to his RBI colleagues, makes it clear that he was interested to continue, but it was not possible "after consultation with the government".
The letter was a brilliant spin on his part to hide the real fact that Modi government was not only haranguing him, but also refused to give a routine extension. Whatever the truth may be, Rajan, or his fans want to sugarcoat the decision of his exit, but there is no doubt that he has been fired from his job.
Rajan has an impeccable academic record in banking and corporate finance, and he is well-known for predicting the 2008 global economic meltdown as the chief economist and director of research at the International Monetary Fund (IMF). He is intellectually sharp, personally charming and a smart public speaker. Over and above, his good looks and hybrid American accent fetched him many admirers.
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| Manmohan Singh-led UPA government had appointed Rajan as the 23rd governor of RBI in September 2013. |
The Manmohan Singh-led UPA government had appointed Rajan as the 23rd governor of RBI in September 2013. When Narendra Modi came to power in May 2014 with a majority in Lok Sabha, almost all of the UPA appointees were shown the door. Modi did not even spare state governors in spite of an existing Supreme Court directive against it. But, Rajan, surprisingly, was able to hang on to his position.
Raghuram Rajan in his tenure as RBI governor has been successful in bringing down India’s rising inflation. Like Modi, he was "lucky" to take advantage of low oil prices at the global level at the time. Like Modi, he also grabbed all credit for it.
His James Bond-style one-liners regularly captivate the media. Thus, his influence was not confined to "Mint Street", but he also envisaged himself as a powerful public intellectual.
Rajan nourished an inherently contradictory ambition: to continue to remain as the governor of RBI working for the Modi government, and at the same time, giving his opinion on government policies and not hesitating to go against the official line of an all-powerful and a control freak regime.
Thus there is no one to be blamed but Raghuram Rajan himself for being humiliated at the hands of the Modi regime. The "celebrity" economists, particularly the ones from the business schools, usually suffer from a sense of authority and entitlement due to their perceived academic supremacy and easy access to the rich and powerful. However, these economists have a limited vision - they can very well scientifically explain what they observe, but they have limitations in imagining what is waiting to happen.
Raghuram Rajan clearly suffers from that limited macro-economist's vision. Any politically astute person in his place would have got the message the day Modi government appointed Gajendra Chauhan as the chairman of FTII.
Even if Gajendra Chauhan’s appointment was not sufficient enough, how come a person of Rajan’s intelligence could not get the picture when Y Sudershan Rao was appointed as the chairperson of Indian Council of Historical Research (ICHR), Lokesh Chandra as president of Indian Council for Cultural Relations (ICCR), and Pahlaj Nihalani as the chairperson of Central Board of Film Certification (CBFC)?
It was actually the "celebrity economist" syndrome which gave Rajan this unreasonable confidence to expect an extension of his tenure under PM Modi while he went on expressing his semi-critical opinion freely.
In his inflated estimate, he had started to believe that his contributions to the country’s economy will protect his position in a regime which has been almost synonymous with being anti-intellectual and intolerant to any dissent.
Rajan, like most other economists, forgot that it is not money power, but political power which is more dominant.
In the last two years, Rajan has made few semi-critical remarks about the Modi government. Most of these remarks were on economic issues and policies. The only (somewhat) political remark, which Rajan had made last year against the backdrop of growing intolerance debate in the aftermath of Dadri lynching, was that the tradition of debate and an open environment is critical for India’s economic growth.
Over and above, Rajan has measured his words, but at the same time, it has not been difficult to see that he was uncomfortable with the economic, as well as the political agenda of Modi regime. In this context, it is a big question mark as to why he was still interested to work for the regime.
Raghuram Rajan would have earned immense personal and intellectual capital if he would have left his RBI job when Narendra Modi came to power. If he was still under the illusion of Modi’s "Sabka Saath Sabka Vikas" slogan, the Dadri episode had also provided another opening for him to make a graceful exit on high moral grounds.
But, by continuing to serve as a main banker of a regime, which thrives on bigotry and proudly boasts of being anti-intellectual, Raghuram Rajan reduced himself to become Modi’s Hjalmar Schacht.
Schacht, the legendary banker of pre-war Germany was dismissed as president of the Reichsbank in January 1939 for his disagreement against Nazi intolerance towards Jewish minority, and particularly due to his differences over the country’s fiscal management with Hitler’s close confidant, Goering.
In spite of his good knowledge of history, it is astounding Rajan preferred to ignore the lessons and even expected Modi regime’s favour to gain an extension.
True to the style of a "celebrated economist", Raghuram Rajan was overconfident over his inevitability in making India’s economy strong, and lacked basic political skill. His fixation with economy took Rajan away from the political reality. He missed many chances of leaving his job as RBI governor while keeping his head held high, but unfortunately, he decided to invite his own humiliation in the end.