Almost everyone has had something to say about India’s rockstar central banker Raghuram Rajan leaving, even actress Soha Ali Khan, who got viciously trolled on Twitter for speaking out on the news even though she is a graduate of London School Of Economics and probably more qualified than those criticising her.
And although theories abound about what transpired between the government and Rajan that ultimately led to Rajan’s decision, leading commentators’ views have ranged from lamenting how the government handled the situation, to gushing praise for Rajan's achievements, to even a few contrarian opinions on his economic policies and where he may have gone wrong. Here’s what commentators had to say on 'Rexit':
In an opinion piece titled ‘Rajan Appeared Uncaring About India's Aspirations,’ veteran journalist and member of BJP and Rajya Sabha Chandan Mitra argues Rajan’s policy stand was too conservative and he did not fully appreciate the growth aspirations of the Indian middle class. Ultimately, it wasn’t technical disagreements with his employer, but by “breakdown of cultural communion,” that led to his departure. “Rajan appeared too distant and uncaring about India's aspirations. That was his unmaking,” he writes.
While lauding Rajan’s achievements in bringing down India’s high inflation rate, India’s sound economic fundamentals meant the country had room to make bigger rate cuts, which could have spurred banks to lend more, according to Mitra.
Writing in The Indian Express, Harish Damodaran makes a strong argument against some of Rajan's more celebrated policies. "Focusing solely on CPI inflation — and ignoring negative WPI inflation — has resulted in producers paying double-digit real interest rates even in a slowdown," he says.
Rajiv Kumar, a senior fellow, Centre for Policy Research, writes in The Indian Express, that Rajan “must take his share of the blame for this unfortunate situation.” According to him, Rajan's actions, particularly his public remarks over the state of tolerance in the country or his advise to finance minister to stick to a fiscal target, may have seemed inappropriate. “Taking on the role of principal critic is perhaps not conducive to working as part of a team,” he said.
Kumar writes, “Rajan also riled a few of Modi’s cabinet colleagues by not engaging with them as equals and instead responding to them through public platforms, almost in hectoring tones. The remark on Make in India; letting the minister of commerce know about the correctness of his foreign exchange stance through the C. D. Deshmukh lecture; exhorting small and medium entrepreneurs to not expect any relief from a depreciating rupee — could all have been handled more discreetly and less dismissively.”
However, overwhelmingly, Indian media is sad about Rajan leaving and many commentators have pointed out the government could have done more to retain him, noting the larger problem of undermining the dignity and independence of the governor’s office by not quashing the personal attacks that were made against him. Many have recalled how Rajan was fighting the good fight, going after “fat cats” or crony capitalists that have learned to use the system with impunity.
In an editorial titled ‘Udta Rajan, Reh Gaya Pahlaj’, journalist Barkha Dutt writes, “The fat-cat cronyism that [Vijay Mallya] has come to symbolize is exactly where Raghuram Rajan's clean-up of the banking sector was directed.”
Dutt also notes that as the only governor since 1991 to not get a second term, “the message the Modi government has sent is that there is no space for public intellectuals who are independent-minded; the Sarkar will never let you forget that you are expected to be a supplicant.”
Guy Rolnik, a journalist and professor at the University Of Chicago, says in the ProMarket blog of the Chicago Booth School of Business, “Rajan’s ability to go after crony banking, or the habit of extending bad loans to insolvent business groups, could be derived exactly from his tenured position at the University of Chicago and his international prestige. While these characteristics are used against him by his detractors, it may very well be the reason that India needs him specifically.”
Writing for NDTV and highlighting what India loses with Rajan’s departure, Mohandas Pai, formerly CFO and head of HR at Infosys, praised Rajan’s initiatives, particularly the inflation targeting to CPI which he called a “radical change”and the bank cleanup that would hold accountable crony capitalists.
“For the first time, a RBI Governor told us that as consumers and savers, CPI impacted us more than WPI. For decades, high inflation had impoverished the saving class, all of us poor souls who slave it out day after day to save some miserable amount and see its value disappear due to high inflation. He explained this to us using Dosa Economics as an example.”
There were other things that will be missed about Rajan say commentators. Sundeep Khanna writes in the Mint that much more than the expiration of his term, the far bigger tragedy is losing Rajan as a teacher.
“Indeed, India’s loss could have been a gain, a gain so huge that it could have had cultural ripples benefiting the economy in multiple ways,” Khanna says.
But more importantly and what seems to concern commentators the most is how India is viewed internationally and among the global investor community in the aftermath of Rajan leaving.
Rajan’s leaving is a hit to India’s credibility, argues Sunil Jain in The Financial Express, saying that in not ensuring a second term for Rajan, the Prime Minister “has squandered some of the credibility India had among the global investor community, credibility that is hard to come by in these strained times.” However, he also made an exception to some of Rajan’s comments. “[Rajan] spoke of the role of criticism – a raucous investigative press and political debate uninhibited by political correctness – in a vibrant democracy, but the comment about Hitler being democratically elected perhaps needed a more mature audience.”
In a scathing opinion piece, Eswar Prasad, notes in the Financial Times that “it is disturbing that independent, analytically based technocratic policymaking that fails to hew closely to the government’s economic and social agenda does not seem welcome” in India.
More broadly, “the government’s unwillingness (or inability) to keep Rajan on is a blow to the bank’s perceived independence and to the broader institution-building that India needs,” Prasad writes. “The RBI is a strong and storied institution but Mr Rajan’s untimely departure will leave scars that could end up scarring the Indian economy.”