Dear Mr Rajan,
You are a rock-star economist-cum-central banker (Thomas Piketty is merely a rock-star economist!). The entire corporate class of India is pitching for an extension for you as the governor of the Reserve Bank of India. The political class also seems kindly disposed towards you (Congress leader P Chidambaram, made that obvious the other day) .There is, however, a discordant note from the BJP's stormy petrel, Subramanian Swamy, who has publicly asked for your dismissal.
Swamy has cited several reasons, including that you are not Indian enough (he says you would rather keep your American green card than the RBI governor's job if you were forced to make a choice). Swamy also believes in the conspiracy theory that you are a plant of international financial institutions on a mission to wreck the Indian economy from within! Swamy believes that you have successfully achieved this objective by insisting on keeping the interest rate high and thereby ruining many existing enterprises and killing the incentive for new entrepreneurship.
You have nothing to worry about. When the corporate class has spoken in unison in support of you, the government is unlikely to ignore that powerful voice.
But the corporate class of India has clearly given the thumbs down to Swamy by asking for a fresh term for you. If Swamy's charges were correct, the business class should have been baying for your blood as you are supposed to have made business in India unviable by refusing to bring down the interest rate! Clearly, Swamy's logic appears skewed.
Subramanian Swamy is supposed to be a reputed economist with a stint at Harvard University, but for the last several decades, he has been a practicing politician. It is possible that he has a political axe to grind; it is also possible that he is doing a hatchet job; as you know, when politics is at a premium economic logic takes a backseat.
Mr Rajan, you have nothing to worry about. When the corporate class has spoken in unison in support of you, the government is unlikely to ignore that powerful voice. Where big corporate interest is involved, even Swamy, the current blue-eyed "boy" of the Prime Minister, might be given short shrift. You have every chance of getting a second innings.
Why is it that the corporate class is backing you, Mr Rajan? The doyens of the business class say that you have made India proud, having been chosen as the world's best central banker of the year. They say that you have controlled inflation with your enlightened monetary policy; that you have saved the Indian economy from the depredations of international volatility.
You have stubbornly refused to disclose the names of the business houses which have defaulted on the repayment of thousands of crores of rupees of public money...
But what the corporate class has left unsaid is that it wants you to continue in the key job because you have provided corrupt business houses protection from the long arms of the law by your astute economic logic. You have achieved this feat by stubbornly refusing to disclose the names of the business houses which have defaulted on the repayment of thousands of crores of rupees of public money advanced by public sector banks (PSBs), leave alone proposing stringent action against them.
When the Indian Express asked for precise information on non-performing assets (NPAs) -- a term which is just a camouflage for the public money, advanced to business houses, that has gone down the drain -- of the major PSBs, your office refused to provide the information.
When an Indian citizen took the route of the Right to Information Act to seek information from your office on the major loan-defaulting business houses, he was told that he had no right, or business, to enquire about the dealings of these corporations with the banks. When the same citizen moved the Chief Information Commission (CIC) and the CIC instructed you to provide the same information, you defiantly moved the Delhi High Court against the CIC order. When the Delhi High Court upheld the CIC order, you did not take it lying down; you chose to appeal in the Supreme Court. The swindlers in the business class must have applauded you for going to the last mile to protect their interest.
The swindlers in the business class must have applauded you for going to the last mile to protect their interest.
Mr Rajan, you will remember the way the Supreme Court came down on you for advancing a spurious argument again and again to justify withholding of the information on bank loans and defaulters. The Supreme Court trashed your argument -- that confidentiality of banking transactions is necessary to keep the Indian economy afloat -- and asked you provide information under the RTI Act.
But even after the SC judgment, you have chosen to ignore the order and are trying to fob off the RTI applicants on one pretext or another. This is because you know that the ambulance-chasing lawyers will not go after the RBI as you, like them, are potentially protecting the interests of the corporate class as a whole.
Mr Rajan, you again demonstrated your solidarity with the swindlers of public money when the Chief Justice of India, T S Thakur, responding to a public interest litigation by Prashant Bhushan asked you to make the names of the big defaulters (those who owed to the banks ₹500 crore or more) public but you desperately pleaded with Justice Thakur to accept the names in a sealed cover so that their identity could be protected. The fly-by-night operators must be deeply indebted to you for allowing them to siphon off thousands of crores of the taxpayers' money without any adverse repercussions on them.
No top politician has spoken against you because they are apparently happy with all your actions, if not some of your more sanctimonious utterances.
Mr Rajan, you must be delighted that you have a great deal of acceptability in the political class as well (with the exception of Dr Swamy). Mr P Chidambaram, the finance minister in the UPA government, praised you as a great economist and an efficient administrator. No top politician has spoken against you because they are apparently happy with all your actions, if not some of your more sanctimonious utterances.
Politicians need and take money from business houses to contest elections and run their party activities and build their private empires as well. They need to pay back these business houses when they are in power. It is not surprising that many of these defaulting business houses which received huge bank advances during the 10-year-long UPA government have been richly rewarded by the two-year-old NDA regime as well. Obviously, which party is in power is immaterial; crony capitalism brooks no partisan considerations.
Clearly, Mr Rajan, you enjoy the trust of the business class as well as the political class. The top bank executives are also happy with you because you have saved them from punitive action on account of losing thousands of crores of the taxpayers' money by reckless lending. After all, they know that in Iceland, 29 top bank executives are languishing in jail for causing big loss to the national exchequer by advancing money without due diligence. The same fate could have befallen Indian bankers but for your valiant struggle to protect them from public scrutiny.
You have chosen to make this politician-businessman-banker nexus more secure by relentlessly trying to keep the criminality of the principal actors under wraps.
Mr Rajan, you are the central figure in this crony capitalism script -- the political and business classes are the principal beneficiaries; the bank executives are the sidekicks who get their pound of flesh as well. You, as a central banker and regulator, had the duty to break this nexus in the larger interest of the poor taxpayer. You could have done this by limiting bank secrecy and increasing transparency about the lending process. But you have chosen to make this politician-businessman-banker nexus more secure by relentlessly trying to keep the criminality of the principal actors under wraps.
Yes, Mr Rajan, you have succeeded - inadvertently, perhaps -- in giving crony capitalism a big leg-up and, in the bargain, you have caused potential loss to the state exchequer of nearly ₹10 lakh crore (the actual amount of default), the money with which the country could have set up a 100-bed fully equipped hospital in every other village across the country.
Never mind. The political class, the business class and the banking sector want you to get an extension in your current job in the hope that your insistence on protecting the big defaulters from the public glare will allow them to continue to rob the taxpayers' money for an extended period.
May their efforts succeed.
An impoverished taxpayer
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