How indispensable is Raghuram Rajan?

How indispensable is Raghuram Rajan?

Raghuram Rajan, to me, deserves more than respect. For both his competence and integrity, he has my reverence. And I know I speak on behalf of millions of others. But does that make him completely indispensable? Should we be focusing on ensuring that a fitting person be appointed as the Governor of the Reserve Bank of India, or that Raghuram Rajan’s tenure must be extended to avoid an end to India’s growing economic promise?

Frankly, I could well be in the camp that wants the current Governor to continue at all costs – but I have been struck by two recent conversations. The first with eminent political economist and author, Shankkar Aiyar, and other with the inimitable Ajay Shah.

Shankkar Aiyar’s column from a couple of weeks ago summarises our discussion. He wrote, “Every governor has dealt with crisis and change. S Venkitaramanan, an incredible mind, shepherded policy through near-bankruptcy, the IMF bailout and reforms. C Rangarajan handled the feat of double devaluation of 1991, oversaw financial sector reforms and reined in the ideology of printed money. Bimal Jalan helped India weather the Asian Contagion and engineered a low-interest regime. Y V Reddy oversaw India’s transition from a high-cost economy to a high-growth economy. D Subbarao ensured stability as Wall Street and the global financial system collapsed.” Dr. Rajan’s performance as a Central Bank Governor has been outstanding – but he questions the cult-like behaviour around him in the context of consistent outstanding performances by other RBI Governors.

Ajay Shah, while giving credit where its due, highlights how the Reserve Bank of India has some distance to cover on issues of transparency and ‘conflict of interest’. However, there is no dispute on the incredible competence, performance and reputation of Dr Rajan. When asked why we would, then, jeopardise a situation by a change at the helm, he urged me to think about an equally high-quality institution in India – the Election Commission – and the fact that it performed as it should (and better) without any drama around who would lead it. I got provoked into thinking about ‘indispensability’.

The media has been overflowing with opinion – on why he should stay or go, what will happen if he stays or goes and more. There is no doubt that given the state of the Indian and global economies, his remarkable performance in navigating India through it and his international reputation as an economist, there are enough reasons to root for Raghuram Rajan to stay. And few reasonable people would have an objection. The real question is, should there be such a hullabaloo if he isn’t granted an extension?

History suggests there is a strong chance that we will find yet another outstanding individual to lead the Reserve Bank and, therefore, I think we should demand that a person of equal stature and skills be identified. We should also ensure that the Government avoid unnecessary and mischievous prolonged speculation about the future of the current Governor. There is no merit in deciding who will assume this position at the eleventh hour. The Government owes us the certainty that is possible in an increasingly VUCA world.

Rather than suggest dire consequences and indispensability of the God-like Raghuram Rajan, I would ask for the confidence that we will continue in safe and capable hands.

That’s my considered view, but what do you think?

Anuradha Das Mathur, Editor, CFO India