NEW DELHI: Senior BJP leader and former finance minister Yashwant Sinha on Saturday said Reserve Bank of India governor Raghuram Rajan is a good economist and should continue in his position.
"If it is in my control, I will continue with him. He is a good economist. Till now he has proven himself as a good governor and he should continue," he told Focus TV.
Sinha's statement comes in the backdrop of speculation that the RBI Governor could be changed if the Narendra Modi-led NDA comes to power after the general elections. The nine-phase election is under way and counting of votes is scheduled on May 16.
Rajan, a career economist, was appointed by the UPA government and assumed charge at the RBI on September 4, 2013.
He was earlier the Eric J Gleacher Distinguished Service Professor of Finance at the University of Chicago's Booth School. Between 2003 and 2006, Rajan was Chief Economist and Director of Research at the International Monetary Fund.
On noted economists Jagdish Bhagwati and Arvind Panagariya showing interest in playing some role if a Modi-led government is formed, Sinha said, "Both are world-class economists and any kind of help from them will be welcomed."
Replying to a question on reducing import duty on gold, he said: "The gold business, which is a source of employment for lakhs of people, has been ruined. We need to change the system."
Asked who could be the finance minister in an NDA government if the coalition wins, Sinha said it will depend on the Prime Minister.
However, he said "it will be good if a person with knowledge of economics becomes finance minister."
Link times of India
Replacing RBI governor Raghuram Rajan may lead to a sovereign rating downgrade: HDFC Chairman Deepak Parekh -ET-08.05.2014
MUMBAI: Any move to replace RBI governor Raghuram Rajan could lead to a sovereign rating downgrade, HDFC Chairman Deepak Parekh has warned. "The government, whichever it is, if he (finance minister) changes the governor, he will get a bad name. There is a possibility of a downgrade if you change the governor... that you are politicising the position," said Parekh, an elder statesman of Indian finance whose advice is often sought by governments and businesses.
Link Economic times
Raghuram Rajan's credentials outstanding, should remain RBI chief: P. Chidambaram
-FE-08.05-14
RBI Governor Raghuram Rajan has an outstanding record and the next government must respect his appointment, Finance Minister P. Chidambaram said today.
"The Governor...(has) been appointed having regard to his outstanding record, his outstanding academics, his reputation and his work earlier in other organisations. The next government must respect that appointment," he said at the AICC headquarters here.
Chidambaram's statement was made amid speculation the RBI Governor could be changed if the Narendra Modi-led NDA comes to power after the general elections. The nine-phase election is under way and counting of votes is scheduled on May 16.
Rajan, a career economist, was appointed for a term of three years by the UPA government and assumed charge at the RBI on September 4.
New govt can fire me if it wants, says Rajan
-HT-12th May 2014
Asserting the independence of the central bank, Reserve Bank of India governor Raghuram Rajan, on Friday, said that it is he who chalks out the monetary policy and the government has little role in it.
“I determine the monetary policy… I say what it is... the government can fire me, but the government doesn’t set the monetary policy. So, in that sense, am I independent.” Rajan was speaking at St. Gallen Symposium in Switzerland.
“I determine the monetary policy… I say what it is... the government can fire me, but the government doesn’t set the monetary policy. So, in that sense, am I independent.” Rajan was speaking at St. Gallen Symposium in Switzerland.
Replying to question during the programme, that was broadcast on Bloomberg TV, the governor said, “I am happy to talk to the government...I am happy to listen to the government but ultimately the interest rate that is set, is set by me.”
Rajan, however, said that the RBI works in association with the finance ministry and is in regular touch with it. He added that he has regular conversations with the finance minister.
“We control the monetary policy… In India, what happens is when we want to do something big, we go and tell the government this is what we want to do and the government is usually supportive...We talk to each other,” explained Rajan.
The governor also said that India would soon manage to achieve 7-8% growth rate with right policies. “Once inflation is brought down to a manageable level it would be possible for the central bank to address and deal with other problems and look at growth,” said Rajan.
India’s economic growth rate was 4.9% in 2013-14, marginally higher from the 4.5% in 2012-13. In the current fiscal the country’s growth rate is expected to be around 5.5%.
A Raghuram Rajan-Narendra Modi team can be good
news for India--FirstPost
by J Shivakumar and Inder Sud
One is amused and yet troubled by the recent media discussion on the non-issue of whether Raghuram Rajan will continue as RBI Governor in case a Narendra Modi government takes over. This is a non-issue because whether we look at the matter from Modi's point of view or Rajan's. Their staying together is such an obvious win-win outcome that it is a no-brainer. Indeed,the two are made for each other and the country badly needs both of them.
Modi has the reputation of recognizing honest and capable public servants and tapping the right person for the right job. He will find in Rajan a person of great integrity, a keen intellect, and a recognized international stature. By all accounts, Rajan has so far performed exceptionally well during his short tenure at the RBI, earning the trust and respect of his staff and others who have interacted with him. He understands, through direct experience, both the Central Government and the RBI's points of view on major economic policy issues.
He is an amiable person who is respectful to others and performs well as a team member. And above all, he is eminently qualified for the job, particularly in the globalized world where the bar for international acceptability is set higher than ever before. It would be hard to find an alternative with such a high standing in the global financial world, precisely what the next Prime Minister needs to gain credibility quickly in a somewhat biased western world.
Some media outlets have reported that several top BJP functionaries are unhappy with Rajan because of so-called policy differences on the trade-off between growth and inflation goals. Rajan, as a highly acclaimed economist, has written extensively about the need to strike the right balance. And there is nothing in Modi’s pronouncements that he does not recognize the political dangers of inflation. The two will bring different perspectives, but share the common goal of growth and employment while keeping inflation low.
Of course, the RBI governor will sometimes be required to take policy positions or make decisions that may hurt some political (and personal)interests. Rajan’s decision to keep interest rates high prior to the elections in order to tame inflation was not popular among many politicians in the Congress party.
But it is not the job of the RBI Governor to make politicians happy; indeed keeping some politicians at bay maybe in the country’s best interest. Modi’s modus operandus in Gujarat that barred members of legislature from serving as the chairmen of boards of state enterprises makes us think that he is likely to give Rajan the necessary space and freedom of action.
Fortunately, there has been a strong tradition in India ever since Independence of the appointment of men (unfortunately no women so far) of the highest caliberas the RBI Governors. Rajan, as the twenty-third governor, follows a long line of distinguished men like CD Deshmukh, LK Jha, IG Patel, Manmohan Singh, and others, who served the country with distinction. All political parties, despite growing political acrimony, have kept the tradition of appointing RBI Governors based on merit and without political consideration. The one sole unfortunate exception is the case of KR Puri, who appointed by the “infamous coterie” when Indira Gandhi was Prime Minister.
This was despite strong written opposition from C. Subramniam,who argued forcefully that Puri, while a respected and accomplished player in the insurance industry, did not have the standing and the prior exposure to the financial world, so badly needed for credibility and acumen to deliver in that post. Luckily the RBI was not severely damaged by this decision. Some of the Deputy Governor's filled the competence deficit needed for the job and, to his credit, Puri did not stand in their way. This speaks to the strength of RBI as an institution.
There is also a tradition in India of not replacing RBI governors during the change of government. Nor have there been cases of RBI governors being dismissed unceremoniously because of policy disagreements. And in a few cases, when there were serious disagreements that stood in the way of policy coordination, they were eased out with a “soft landing” by being accommodated in other desirable postings like the lucrative position of India’s Executive Director at the IMF.
Some media outlets have reported that several top BJP functionaries are unhappy with Rajan because of so-called policy differences on the trade-off between growth and inflation goals. Rajan, as a highly acclaimed economist, has written extensively about the need to strike the right balance. And there is nothing in Modi’s pronouncements that he does not recognize the political dangers of inflation. The two will bring different perspectives, but share the common goal of growth and employment while keeping inflation low.
Of course, the RBI governor will sometimes be required to take policy positions or make decisions that may hurt some political (and personal)interests. Rajan’s decision to keep interest rates high prior to the elections in order to tame inflation was not popular among many politicians in the Congress party.
But it is not the job of the RBI Governor to make politicians happy; indeed keeping some politicians at bay maybe in the country’s best interest. Modi’s modus operandus in Gujarat that barred members of legislature from serving as the chairmen of boards of state enterprises makes us think that he is likely to give Rajan the necessary space and freedom of action.
Fortunately, there has been a strong tradition in India ever since Independence of the appointment of men (unfortunately no women so far) of the highest caliberas the RBI Governors. Rajan, as the twenty-third governor, follows a long line of distinguished men like CD Deshmukh, LK Jha, IG Patel, Manmohan Singh, and others, who served the country with distinction. All political parties, despite growing political acrimony, have kept the tradition of appointing RBI Governors based on merit and without political consideration. The one sole unfortunate exception is the case of KR Puri, who appointed by the “infamous coterie” when Indira Gandhi was Prime Minister.
This was despite strong written opposition from C. Subramniam,who argued forcefully that Puri, while a respected and accomplished player in the insurance industry, did not have the standing and the prior exposure to the financial world, so badly needed for credibility and acumen to deliver in that post. Luckily the RBI was not severely damaged by this decision. Some of the Deputy Governor's filled the competence deficit needed for the job and, to his credit, Puri did not stand in their way. This speaks to the strength of RBI as an institution.
There is also a tradition in India of not replacing RBI governors during the change of government. Nor have there been cases of RBI governors being dismissed unceremoniously because of policy disagreements. And in a few cases, when there were serious disagreements that stood in the way of policy coordination, they were eased out with a “soft landing” by being accommodated in other desirable postings like the lucrative position of India’s Executive Director at the IMF.
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