The decision by India’s Reserve Bank Gov. Raghuram Rajan to stand down at the end of his term and return to the United States is an embarrassment for India’s fiscal ambitions on the global stage. Rajan was handpicked by Prime Minister Narendra Modi and even given the wink that he could be elevated to a cabinet rank. Modi had plans to use the Rajan reputation to advantage if one is to believe the rumors which ricochet off the corridors of power in New Delhi.
What then went wrong and slowed down India’s emerging fiscal power juggernaut?
Clearly, Arun Jetley and his tacit if not needlessly shrill support from Subramaniam Swamy who had no real reason to declare war conspired to keep Rajan at bay and clip his wings.
In all fairness Rajan’s outspoken manner and his willingness to give opinions on issues unrelated to his role fed the hostile machine as Jetley adroitly allowed Swamy to create a furore every few days. Rajan spoke of corrupt politicians, the obtaining of wasteful educational degrees, mocked the way the government was allowing inflation to eat into the common man’s disposable income and generally was to put it bluntly, blunt.
Also working against his tactics was former Reserve Bank Gov. Gurumurthy and this triumvirate vexed Modi enough to backtrack on using Rajan as his ace in the hole to attract foreign investment and give credibility to the Modi era economic policies. The shabbiness of the departure hastened by Rajan himself shows the huge gap that had formed between him and Modi.
The prime minister, who had once referred to Rajan as the best "economics teacher" on the planet was clearly motivated and irritated by Rajan’s criticisms of current governance and piqued that his choice was putting his government to the sword.
While Rajan will disappear into history and Jetley and co. will promise to fill in the void on the global stage the fact is that Modi displayed relatively thin skin and was unable to take either the "betrayal" as he saw it by Rajan’s honesty and must now contend with the fallout.
To that extent he is on the hot spot because he now has to depend that much more on Jetley and also contend with the naked ambitions of Swamy who will most definitely make a bid to be a considered replacement.
Thing is the world may not be interested in India’s realpolitiks and intrigue and be a little more concerned with the message that dumping Rajan sends out.
One that underscores the promise of a robust economic revolution.
One that indicates a fall back to old practices that have proven to have failed.
One that stresses the fact the Modi brooks no resistance even if he has to let the best man go.
For India the doubt that the more things change the more they stay the same.
True, Rajan is not indispensable but was he thrown under the bus for bigger interests and his refusal to lower interest rates and let the big boys of business pay less on their huge loans?