Why It Would Be Difficult To Fill In The Shoes Of Raghuram Rajan?

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Raghuram Rajan will leave the Reserve Bank of India as Governor after his term expires in Sept, not opting for a second term.

Why It Would Be Difficult To Fill In The Shoes Of Raghuram Rajan?
This is a big jolt for the country, the economy, stock markets and the forex markets. Rajan commanded tremendous respect and several financial experts, dubbed him the best Central Bank governor in the world.

It's a big jolt and economic portals are saying that Rajan exit (Rexit), is much biggger than the Brexit. 

Read more on the Brexit and its impact on India here

What was so good about Rajan?

To begin just take the clean-up in banks. For years banks did not report the right level of non performing assets. Rajan took a hard stand on cleaning bank books. He was "no nonsense" when it comes to asking banks to report the right levels of NPAs. 

He ignored the clarion calls from Industry and even from the government to reduce interest rates. He steadfastly focussed on fighting inflation, no matter how much pressure was piled onto him to reduce interest rates.

The RBI governor was often described as Rockstar governor.  Among his first speeches after being appointed by the previous UPA government in the middle of an economic crisis, Rajan expressed reservations over the export-led focus of the 'Make in India' programme of the Modi government.

He remained quite vocal when it mattered. He expressed some reservations on the mechanism of GDP calculations. He had a view on everything, including tolerance.

He rightly predicted the Financial crisis of 2008, when bankers went overboard with lending, while throwing caustion to the wind.

"If Rajan is not continuing, the biggest risk will be to the Indian bond and currency Markets," Christopher Wood said in the Fear and Greed report back in May.

One tweet on Raguram Rajan's exit was interesting, "LIke I said Raghuram Rajan is the Rahul Dravid of Indian economy: played balls on merit, showed good footwork & kept a steady temperament."

Former Finance Minister, P Chidambaram had this to say,""As I had said sometime ago, this government did not deserve Dr Rajan. Nevertheless, India is the loser," he added.

Rajan will be returning to academia."I will, of course, always be available to serve my country when needed," he said.

The country is going to miss Rajan. The immediate toll on Monday will be the forex markets, which should see the rupee declining. The stock markets and bond markets may follow.

Shekhar Gupta had this to say in his tweet: "One way of looking at RaghuramRajan story: War on crony capitalism is over. Full normalcy restored. Capitalism lost, cronies won."


Read more about: raghuram rajan, rbi
Story first published: Saturday, June 18, 2016, 22:00 [IST]
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