Reserve Bank of India (RBI) governor Raghuram Rajan has stunned government officials and investors on Saturday (18th June) by announcing that he would step down when his term ends on September 4th, 2016. He also announced that he would not be seeking a second term as the RBI Governor. Noticeably he was facing continuous and serious criticism by a section of the ruling party members. His decision has obviously sparked a political war of words in which the opposition parties have accused the government of hounding him out.
Rajan in a letter written to his staff at the Central Bank has stately expressed his desire to go back to academia after his term ends. "I am an academic and I have always made it clear that my ultimate home is in the realm of ideas. The approaching end of my three-year term, and of my leave at the University of Chicago, was therefore a good time to reflect on how much we had accomplished…. on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016. I will, of course, always be available to serve my country when needed", read Rajan's letter to his RBI team.
Critics of Raghuram’s policy are elated by the decision made by the RBI Governor; they claim that the policies adapted by Governor were able to pull the country through the global crisis of 2013 however thereafter his policies were not conducive for the Indian economy.
The present RBI Governor has tackled the currency crisis of 2013 effectively, but thereafter his policies were perhaps not suited to the Indian system. One of the main criticisms for Rajan is particularly the way he tackled the bad loan menace. Since he took over as the RBI governor in September 2013, in three years he has come out with as many as 3 different policies to tackle the bad loan menace in the banking system, all were ineffective.
Among the most fierce critics of Raghuram was Subramanian Swamy, a BJP MP and former Harvard professor who has been lobbying in the favour of Raghuram’s exit, he says that the former University of Chicago professor is no doubt an accomplished academician but for India, he is a misfit.
Senior Congress leader P Chidambaram said he is not surprised by the move but at the same time he is disappointed by the decision of Governor Raghuram Rajan. He further added "As I had said some time ago, this government did not deserve Dr Rajan. Nevertheless, India is the loser".
Union Finance Minister Arun Jaitley has said the government would announce Rajan's successor soon. Several names including Urjit Patel, Arundhati Bhattacharya, Rakesh Mohan, Vijay kelkar, etc. are doing the rounds as a possible successor.