Rexit, it is, on his own terms

Rexit, it is, on his own terms

Well-balanced, pertinent views. Excellently presented.

M G Warrier


"Yet, what is a matter of sadness and concern is the way Rajan’s exit was manoeuvred. The public campaign against him by Dr. Subramaniam Swamy, the gratuitous statements questioning Rajan’s integrity and most important of all, the silence of Prime Minister Modi in the face of this campaign raise doubts over whether there was a larger agenda at play here.
Modi’s silence can only mean two things neither of which add to his merit — that he agreed with Swamy or that he was unable to rein him in. If he was indeed unhappy with Rajan, a quiet word with the Governor would have been enough to settle the issue. As things stand, the silence from the government in the face of an attack on a constitutional authority who is constrained from responding can only give rise to damaging speculation.
That said, Rajan’s exit is not the unmitigated disaster for the economy as is being feared. The RBI is an excellent institution that houses some of the best professionals in this country in the field of economics and finance. It has always been respected by the markets and not just because of who’s heading it at a given time.
There will be some turbulence come Monday but that should be more because of the timing of Rajan’s announcement. The market is nervous as it is with Brexit round the corner and Rajan’s exit might shake it up a bit more. But things will eventually return to an even keel.
If the market does go into a downturn in the coming days, rest assured that it will not be because of Rajan’s exit. It will be because he’s replaced with someone of lesser standing. That’s a pitfall the government will struggle to avoid given Rajan’s standing and his larger-than-life image.
And that’s also the challenge that Rajan has thrown at the government. Raghuram Rajan has had the last laugh alright."


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