Why is India’s paid media shedding crocodile tears over Raghuram Rajan? – T.S.V. Hari

Raghuram Rajan Quote

T. S. V. HariEvery buffoon pontificating on idiot-boxes, yelling themselves hoarse are hiding the sordid fact that Rajan had the temerity to contradict Prime Minister Narendra Modi and Finance Minister Arun Jaitley on the state of the economy in 2015. – T.S.V. Hari

Was Raghuram Rajan, India’s central bank boss quietly told that he wouldn’t get an extension?

Was such a decision made because Rajan allegedly tried to help the likes of P. Chidambaram to escape prosecution in vital issues?

Are sections of India’s paid media hiding some horrible truths that include accusations of money-laundering under the nose of Rajan?

Every buffoon pontificating on idiot-boxes, yelling himself/herself hoarse are hiding the sordid fact that Rajan had the temerity to contradict India’s Prime Minister Narendra Damodardas Modi and the Finance Minister Arun Jaitley on the state of the economy in 2015.

Ironically, Arun Jaitley is leading the pack that is singing paeans of the ‘retired-hurt’ Rajan. Ironically, Jaitley was at the wrong end of Rajan’s firing line.

Operative excerpts from a DNA report:

Rajan lashed out at the government and the economic situation in the country. He has taken a stand and done so whenever deemed necessary.

1 – Raghuram Rajan contradicted Finance Minister Arun Jaitley’s take on Indian economy during China slowdown

Finance Minister Arun Jaitley and Chief Economic Advisor Arvind Subramanian called the China-led slowdown of the world economy as opportunity for India to grow.

Jaitley had said that India can replace China as a driver of global growth.

Raghuram Rajan countered by saying it will be a “long time” before India can replace China as a growth engine for global economy even before it grows at a faster rate.

“India is one-fourth to one-fifth of China’s size. Even if we can overtake China in terms of growth rates, the magnitude of the effect will be far smaller for a long time to come,” Rajan said.

2 – Rajan expressed concern over the “overburdening” of Reserve Bank of India

When the markets were crashing on China’s rout, Rajan hinted that Reserve Bank’s intervention can do more harm than good.

“I have been a little concerned about the immense burden for action that is falling on central banks, and I think it is quite legitimate for central banks to say at some point we can’t carry the burden ourselves. In fact, we may not have the tools to do everything that is asked of us. Don’t keep asking us to do more because at some point we get into territory where the consequences may be worse if we actually act.”

3 – Rajan ordered real estate players to cut prices rather than rely on rate cuts

When slowdown struck the real estate market, with unsold inventory piling up to a 48 month high, real estate players started batting for a rate cut.

Rajan came out and asked them to cut prices instead.

“I do believe that if real estate developers who are sitting on unsold stocks bring down prices, that will be a very great help to the sector because once there is a sense that prices have stabilised, more people will be willing to buy,” Rajan was quoted as saying.

4 – Rajan asked India Inc. not to place extra faith in exports through the ‘Make in India’ initiative.

Rajan cautioned the government against putting too much faith in exports through its ‘Make in India’ policy when he was chided by senior BJP members for his tough stance on interest rates.

5 – Rajan trashed Wholesale Price Index and adopted Consumer Price Index as an indicator on inflation

Rajan trashed WPI as its key indicator on inflation and adopted consumer price index CPI.

T.C.A. Srinivasa Raghavan, one of the most respected financial journalists politely revealed the truth before Rajan wrote his now famous offer to “return to academia after the end of his term on September 4”. Excerpts:

Literally anyone with a decent education or work experience can be appointed to the job, which is basically a managerial one with little room for manoeuvre. As a manager, Rajan hasn’t been very good for the RBI.

He came as a smallish giant, and some people pretended he was a big giant. This speaks volumes about his networking and communication skills.

His academic accomplishments, however—by common consent in the economics fraternity—fall somewhere in the B++ or A- category.

He is not the first economist to hold the job. There have been four others before him. But even they — I G Patel, Manmohan Singh, C Rangarajan and Bimal Jalan — had been employed by the government for a long time before they got the job.

There was no particular professional reason for giving them the job; it was just that the prime minister trusted them or, as was more often the case, didn’t care who the governor was so long as the finance minister was okay with him.

Professionally, they were known only within a small group of economists and bureaucrats. All of them—Patel included—were better bureaucrats than economists.

Ever since the RBI was set up in 1935, there has not been a single governor who was a ‘giant’—as the central bank likes to call them. All former governors had a certain stature because most of them had been civil servants and the civil service, alas, tolerates no giants.

Anyone could have been—and indeed was, once or twice—appointed to the job and would have performed just as well. The highly professional staff of the RBI holds the governors up doing all the work. The governor gets the credit for tinkering ever so slightly with the interest rate every now and then.

No governor ever says ‘we’; it is always ‘I’.

What the Lord giveth, the Lord can also taketh away.

As governors, ex-bureaucrats and/or economists grumbled. But they never defied.

How can one defy a prime minister?

Rajan is the first governor to have come from outside the government/RBI system. His brief stint as chief economic advisor was for cosmetic purposes only.

After four years of working in the system, he surely knows the score, which was stated best by Y. V. Reddy: A governor is completely independent—within the limits set by the government.

The Union Finance Ministry is a mess

Serious questions have been raised about the performance of Arun Jaitley.

Some 24 hours before Rajan put in his papers, a blog exposing the RBI governor being in cahoots with banking criminal T. M. Bhasin—the Vigilance Commissioner who has collaborated with the enemies of India was published.

The blog does not claim ‘exclusivity’ as do the likes of Arnab Goswami.

Goswami holds the job which is more important than that of Modi.

The channel that employs him claims that every decision taken by the government is the aftermath of exposures in TimesNow.

TimesNow was one of the channels that had hauled India’s National Security Advisor Ajit Doval over the coals after the Pathankot incident. The lines adopted by all those who aped Goswami changed after the truth came out in these columns.

The opening gambit questions again:

Was Raghuram Rajan, India’s central bank boss quietly told that he wouldn’t get an extension?

Was such a decision made because Rajan allegedly tried to help the likes of P. Chidambaram to escape prosecution in vital issues?

Are sections of India’s paid media hiding some horrible truths that include accusations of money-laundering under the nose of Rajan? – Incubation, 19 June 2016

» T.S.V. Hari is an independent senior journalist in Chennai and Mumbai who blogs at Incubation.

Reserve Bank of India seal on a gate outside the RBI headquarters in Mumbai

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