Targetting Rajan

The BJP government is trying to make Raghuram Rajan a scapegoat for the ills plaguing the economy

Shubhda Chaudhary Delhi

In a dramatic development, BJP leader Subramanian Swamy has recently targeted the Governor of the Reserve Bank of India, Raghuram Rajan, in a letter addressed to Prime Minister Narendra Modi, asking for his immediate dismissal. In his letter, Swamy stated that Rajan is playing a pivotal part in wrecking the Indian economy and is not ‘fully Indian.’ Rajan, who had been appointed by the UPA regime and will be completing three years this September, holds an apolitical position, but his presence and comments on the state of the economy have caused serious heartburn to the BJP establishment, which is now responding with accusations and slander.

Finance Minister Arun Jaitley immediately stated that the government would not act under any external influence, especially when it comes to deciding on the extension of Rajan. It may be pragmatically predicted that if the BJP were to give more time to Raghuram Rajan, it would benefit the Indian economy and the party. The government otherwise has two options, either to let Rajan go, or to plant in his place a retired bureaucrat or a banker, whoever suits their ideology and functions as a mouthpiece of the government. But appointing a retired bureaucrat would not help the BJP much, as it would send signals, especially to international investors, that the government is fiddling with the functioning of the RBI, which could have dramatic consequences. Rajan, an internationally acknowledged figure, has increased faith in India’s monetary policy and also the fact that he will be able to pressurize the government to deal with inflation and macro-economic issues through supply-side management and prudent fiscal policy. All the more reason why the government needs Rajan for the cleaning up of the public-sector banks.

Last year, a few of the BJP MPs had been murmuring that there were two people responsible for the slack in the economy, the first being Rajan due to his monetary and fiscal policy and the second being Rahul Gandhi, who is not letting the GST bill pass in the Rajya Sabha. Along with calling Rajan ‘not fully Indian’, Swamy has also remarked that he is ‘just staying in India on US’s Green card’ and hence, should be sent back to Chicago where he was a professor.

Since the BJP has come to power, Rajan has firmly stood his ground and manoeuvered a calibrated and precise reduction in interest rates so that the inflation could be controlled. It is definitely quite surprising that BJP MPs and other ministers are so anti-Rajan, especially when the Finance Minister himself has been toeing the Rajan line, in spite of some opposition from the Chief Economic Adviser Arvind Subramaniam.

Reacting to Swamy’s comment, Senior Congress leader Jairam Ramesh expressed the view that the RBI governor’s post should not be politicized. BJP Spokesperson on Economic Affairs Gopal Krishna Aggarwal stated that the letter written by Swamy was his own personal opinion and whether or not Rajan’s term would be extended for the next two years was a decision for the BJP government. Nevertheless, it would do well to remember that Prime Minister Modi himself praised the RBI Governor last year for explaining the complex monetary policies to him in one-to-one meetings with a lot of attention to detail and patience. Meanwhile, the BJP is distancing itself from Swamy’s letter and is not making any declarations from its side. Though, Swamy might have created a hullabaloo, the BJP is not going to clear the air or take sides because, ultimately, the less we know about the economy, the better it is for the government.