Good rebuttal of the criticism (mostly unjustified) surrounding Raghuram Rajan's potential exit from RBI:
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Raghuram Raj ends: Point & counterpoint
By Swaminathan S
Point: Raghuram Rajan has been treated badly by the government.
Counter point: The way this has been handled is in sharp contrast to the way things happened in the UPA regime and during their proxy, Chandra Sekhar’s reign. For example, S Venkitaramanan was appointed governor by sacking Malhotra without notice. One SEBI Chairman who had gone to attend a function in his official capacity heard on TV that he did not have to report for work the next day as he would not be getting an extension. Another SEBI Chairman who had all but been guaranteed an extension found himself pipped at the post literally. A file went into the PMO with his name on it, a different name was on the file when it came out. So, the UPA has treated people much worse. In sharp contrast, all that the Modi government has done is to inform Raghuram Rajan that he may not be re appointed. The fact that this has played out with 2 months to go speaks highly of the government. As does the fact that neither the PM nor the FM has uttered one word against him even by innuendo.
Vox Populi comments: Would agree. Only point would be about the tone and tenor of Subramaniam Swamy's crusade against Rajan's continuation. His choice of words could have been better.
Point: Rajan had to go because the government wants a yes man. One journalist says that Rajan was no chamcha and therefore he had to go.
Counter point: No governor of RBI can be a Yes man or will be a Yes man. Even when Venkiratamanan wanted to reduce interest rates, it took him most of his tenure to get the leadership within RBI to see his way. The primary role of a central bank is to fight inflation and no central bank governor will be able to sleep soundly if this objective is not met. Even when people who have served in North Block which houses the Ministry of Finance and moved to RBI as many have done, they have changed their views based on what was expected of them at RBI and not based on what they felt when they may have been at North Block.
Vox Populi comments: All governments will want a yes man and will try their best to appoint one. As have Congress govts in the past. However, with the proposed Monetary Policy Committee, it will be difficult for govts of the day to push their agendas in RBI in future.
Point: Rajan’s departure is bad for the market, it is bad for the economy, it is just bad.
Counter point: True that. But the reasoning is wrong. The uncertainty caused by Rajan’s departure is what will worry the markets. It is not that markets want Rajan, it is that they don’t like uncertainty. It is the same markets that went through the roof when it was clear that Modi would be PM. It is ludicrous to argue that the market backs Modi but not his ability find a suitable governor for RBI. And above all else, expect RBI to intervene over the next months to keep things stable. It should be business as usual.
That’s not all. My brother pointed out to me that the announcement of the exit could not have been timed better. Because between Brexit and Rexit, there are no prizes for guessing what is going to engage the attention of foreign investors.
Agree. This is pure Goebbels! RR might be an international star and a favourite of the financial jockeys of the west. However, deliberately spreading canards in the hope that markets actually fall is a vile act.
Point: The BJP has no bench strength as is evident from their choice of people for important posts.
Counter point: It is not like Rajan came from the ranks of the BJP, he was actually a UPA pick and the Modi government let him stay on the basis of his credentials. Finding good people should not be difficult given the importance of the position. While it is true that the bench strength of the BJP may be poor, they can always fall back on the time tested policy of digging into the pool of retired bureaucrats to pick the next governor. It is also naive to believe that the government of the day will be driven by any factor other than competence when picking the next governor of the RBI. Even they know surely that there is too much at stake.
For a country of this size, certainly there is no dearth of potential RBI governors!
Point: Raghuram Rajan had to go because the RSS wanted him out. Because Subramaniam Swamy wanted him out. Because. Because. Because.
Counterpoint: I don’t know. And it does not matter. All that matters is that a man respected globally is leaving. I hope the government can find a way to utilize his services. Possibly by making him the Chairman of the proposed Monetary Policy Committee. But for that to work, the Committee would have to be kept independent of RBI and not subservient to it.
Agree. Subramaniam Swamy is not part of the govt and he has a right to criticize RR (although don't support the language used by him).
I hope the story is not over. Not yet.
Source:
https://www.linkedin.com/pulse/raghuram-ka-raj-point-counterpoint-swaminathan-s
___________________________________________________________________________________
Raghuram Raj ends: Point & counterpoint
By Swaminathan S
Point: Raghuram Rajan has been treated badly by the government.
Counter point: The way this has been handled is in sharp contrast to the way things happened in the UPA regime and during their proxy, Chandra Sekhar’s reign. For example, S Venkitaramanan was appointed governor by sacking Malhotra without notice. One SEBI Chairman who had gone to attend a function in his official capacity heard on TV that he did not have to report for work the next day as he would not be getting an extension. Another SEBI Chairman who had all but been guaranteed an extension found himself pipped at the post literally. A file went into the PMO with his name on it, a different name was on the file when it came out. So, the UPA has treated people much worse. In sharp contrast, all that the Modi government has done is to inform Raghuram Rajan that he may not be re appointed. The fact that this has played out with 2 months to go speaks highly of the government. As does the fact that neither the PM nor the FM has uttered one word against him even by innuendo.
Vox Populi comments: Would agree. Only point would be about the tone and tenor of Subramaniam Swamy's crusade against Rajan's continuation. His choice of words could have been better.
Point: Rajan had to go because the government wants a yes man. One journalist says that Rajan was no chamcha and therefore he had to go.
Counter point: No governor of RBI can be a Yes man or will be a Yes man. Even when Venkiratamanan wanted to reduce interest rates, it took him most of his tenure to get the leadership within RBI to see his way. The primary role of a central bank is to fight inflation and no central bank governor will be able to sleep soundly if this objective is not met. Even when people who have served in North Block which houses the Ministry of Finance and moved to RBI as many have done, they have changed their views based on what was expected of them at RBI and not based on what they felt when they may have been at North Block.
Vox Populi comments: All governments will want a yes man and will try their best to appoint one. As have Congress govts in the past. However, with the proposed Monetary Policy Committee, it will be difficult for govts of the day to push their agendas in RBI in future.
Point: Rajan’s departure is bad for the market, it is bad for the economy, it is just bad.
Counter point: True that. But the reasoning is wrong. The uncertainty caused by Rajan’s departure is what will worry the markets. It is not that markets want Rajan, it is that they don’t like uncertainty. It is the same markets that went through the roof when it was clear that Modi would be PM. It is ludicrous to argue that the market backs Modi but not his ability find a suitable governor for RBI. And above all else, expect RBI to intervene over the next months to keep things stable. It should be business as usual.
That’s not all. My brother pointed out to me that the announcement of the exit could not have been timed better. Because between Brexit and Rexit, there are no prizes for guessing what is going to engage the attention of foreign investors.
Agree. This is pure Goebbels! RR might be an international star and a favourite of the financial jockeys of the west. However, deliberately spreading canards in the hope that markets actually fall is a vile act.
Point: The BJP has no bench strength as is evident from their choice of people for important posts.
Counter point: It is not like Rajan came from the ranks of the BJP, he was actually a UPA pick and the Modi government let him stay on the basis of his credentials. Finding good people should not be difficult given the importance of the position. While it is true that the bench strength of the BJP may be poor, they can always fall back on the time tested policy of digging into the pool of retired bureaucrats to pick the next governor. It is also naive to believe that the government of the day will be driven by any factor other than competence when picking the next governor of the RBI. Even they know surely that there is too much at stake.
For a country of this size, certainly there is no dearth of potential RBI governors!
Point: Raghuram Rajan had to go because the RSS wanted him out. Because Subramaniam Swamy wanted him out. Because. Because. Because.
Counterpoint: I don’t know. And it does not matter. All that matters is that a man respected globally is leaving. I hope the government can find a way to utilize his services. Possibly by making him the Chairman of the proposed Monetary Policy Committee. But for that to work, the Committee would have to be kept independent of RBI and not subservient to it.
Agree. Subramaniam Swamy is not part of the govt and he has a right to criticize RR (although don't support the language used by him).
I hope the story is not over. Not yet.
Source:
https://www.linkedin.com/pulse/raghuram-ka-raj-point-counterpoint-swaminathan-s
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