Raghuram Rajan has been quite outspoken earlier as the RBI governor, unlike others in similar positions. Most people remember him for his incisive, even if controversial, remarks that need not necessarily had do with interest rates or inflation.
Post-demonetisation, the former RBI governor revealed that he did "not favour demonetisation as he felt the short-term economic costs associated with such a disruptive decision would outweigh any longer term benefits from it".
As is well known, many economists questioned the notebandi exercise, which removed 86 per cent of all the cash in circulation in an economy that simply runs on cash. Several others called it a disaster. In the end, it was, at best, an attempt to expose black money that failed. Of the demonetised currency, 99 per cent of the scrapped Rs 500, Rs 1,000 notes were back in the system. In contrast to the Great Depression in the United States in the late 1920s and 1930s, the demonetisation was only 30 per cent.
At the recently held Times Litfest in Delhi, Rajan talked about the phenomenon of "elected autocrats" - "It is worrying. It is often people who appeal to a certain segment of society have a very strong following. What happens then is that the potential for mistakes increases. You are not listening to the broader electorate. 'These are the people who elected me and I am going to listen to their will and wishes.' And you take countries down the wrong path sometimes."
Rajan suggested that stakeholders in the system often bowed to strong leaders.
"Illiberal democracy is not just a function of the leader, it is also a function of the system, which doesn't stand up and exercise independence - the corporate houses, the press and the business groups. All of them essentially tend towards bowing even though there are exceptions. They do that because their interests are all aligned. This is where illiberal democracy is crony capitalism also because it's a small group. There is a cosy relationship between the political and corporate establishments."
But this has been true for a long time. Business houses were linked to the British interests in colonial India. Major industrial interests like the Tatas, Birlas, Mafatlals etc, or individuals like Purshottamdas Thakurdas and GD Birla, balanced between the British Raj and the Congress. Many of those big business leaders and their corporate entities were, in fact, wary of Jawaharlal Nehru, whom they considered "radical".
But the balance between the Indian corporates, foreign capital and the state has become stronger. It is a “no-brainer” to state that the media, including the electronic media, is extremely protective of both an illiberal and less-illiberal leadership. Crony capitalism infers a necessary choice for the bigger capital. Of course, smaller capital may be quite influential in smaller states, or even a group of small states. But building influence and access to decision-makers to build crony capitalism, also requires media support.
One look at the media will show how careful it is to be on the right side of an illiberal state and leadership. Select individuals representing acceptable support to the illiberal executive or critiquing oppositional or middle-strata representatives, has become the norm. Nor is there the faintest attempt (including UPA 1 onwards) to create an electronic media supervisory body in the form of the press commission which needed oversight decades ago.
So, as the US media guru Marshall McLuhan stated, “The medium is the message.”
TV, which is often far from partisan, has now become a defender of the illiberal establishment. This is anything, but a harbinger of a liberal society. How many liberals find space in the media?
Isn’t the mantra in most channels to praise "the leader" and "smaller leaders". Of course, lesser leaders like Mamata Banerjee have come on TV as a sole spokesperson of the West Bengal government. She systematically listed the discrimination against her state, contrasting the level of support from the Union government with the substantially greater support given by the Centre to many other states which had the same political establishment as the ruling coalition.
Ironically, even the terminology has become a victim. The Union government is overwhelmingly termed the Centre, which is not a Constitutional term. But the term “centre” is the reality of the dispensation of power in the country. Whereas, the Union and Concurrent lists together have about 144 powers (97+47), the states’ list has just 66 powers, as the Union has precedence over the use of the 47 Concurrent powers listed in the Constitution. That is why celebrated federalist KC Wheare termed India to be a “quasi-federal” state. The Supreme Court has also noted this debate.
In the end, money talks, especially when huge amounts of money have been illegally stashed abroad. In the case of the Panama Papers exposed by the International Consortium of Investigative Journalists (ICIJ) in early 2015 listing 500 Indians, the information was quickly suppressed. Just a few weeks ago, the ICIJ divulged a list of 714 off shore holdings. There is no sign that the Government of India intends to take any action. Nor is it the case that the UPA 2 has put forward any strong move to use this, and the previous expose, to track down and penalise black money holders. Apart from the relatively weak Left, hardly any party has.
So, while Raghu Rajan has made several important points these were also raised in the Times Litfest by renowned lawyer Gopal Subramanium, who stressed that the Constitution guarantees freedoms so that "no big brother looks over your shoulder". But just as the attempt of the National Judicial Appointments Commission - by the UPA 2, and currently the NDA - to use executive privilege to have a major say in judicial appointments clearly indicate, the executive demands primacy in the Constitution order. Thankfully, CJIs - from justice JS Kehar to justice Dipak Misra - have defended the collegium.
The judiciary, however, must be strengthened as crony capitalism leads to assaults on democratic rights, irrespective of judicial norms.