Is the Raghuram Rajan-Chidambaram bonhomie too good to be true? | Business Standard

Is the Raghuram Rajan-Chidambaram bonhomie too good to be true? | Business Standard

Online comments posted on October 16, 2013:

From what we get to read in the media, Dr Rajan has quickly(as compared to his predecessors ) learnt the art of reframing his arguments to convince North Block that RBI is an institution with an identity which needs to be protected in national interest and the central bank needs the fiscal policy and real sector reforms support from GOI. His IMF background has not uprooted him from the Indian context and he is not hiding his anxiety to protect the interests of the majority of the country’s population which lives below the internationally accepted poverty line (per day expenditure of $2). RBI since at least the dawn of independence, has taken on itself the responsibilities relating to institution building and credit deployment for various purposes depending on priorities of the governments of the day, in addition to the central bank’s core functions. The Indian central bank’s focus on financial inclusion and taming inflation which are in tune with the vision expressed by Dr Rajan before taking over as Governor. By now, he has got a feel of the constraints with which RBI has been having a tight rope walk in harmonizing the monetary policy in recent times with the unbridled fiscal policy guided by pulls and pushes of a coalition government at the Centre. Finance Ministry has been asserting ownership rights over RBI almost in the same way it has been handling PSUs by interfering even in RBI’s internal HR matters. The FM who put his Secretary Dr D Subbarao as the Governor of RBI hoping to have a submissive Governor found a different person in Subbarao soon after he started functioning from Mint Road. In that context, perhaps, the FM is going to be ‘second time’ unlucky.


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