The Reserve Bank of India (RBI) Governor Raghuram Rajan’s hasty decision to quit has been read and received by opposition, friends and colleagues as a lack of support from his political bosses, Fin Min Jaitley and Prime Minister Narendra Modi.
Last week, a newspaper reported that a selection panel is going to field for the next RBI Governor rather than directly offering the former IMF chief economist an extension. It is to be noted here that the RBI Governor’s tenure is of three years.
“He felt it would belittle the position of the RBI governor if he had to appear before the committee,” said one senior commercial banker who knows Rajan personally but had not spoken to him since his decision, reported Firstpost.
“It would reveal a lack of government support. Rather than have two more years of constant quibbling, he decided to go.”
The webportal added that sources said, Rajan was also upset that Jaitley had not backed him more strongly, especially when he was criticised for lack of “Indian-ness.”
As the new RBI Governor, Rajan had joked about the top job in September 2013 that he wasn’t expecting to win any votes or Facebook ‘likes’ in the position.
Rajan’s move came as a surprise for the Government as he resigned without warning and did not inform the top members of the government before releasing an open letter to staff on June 18.
Rajan, in his letter to his staff, said that he had been open to seeing through changes he championed such as the creation of a monetary policy committee to set interest rates and a clean-up of the banking sector.
He added that, “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 Sept. 4, 2016.”
According to news reports and their sources, neither had Rajan contacted Modi’s office directly nor was there a meeting or discussion between the two planned.
The Finance Minister tweeted after a delay of more than two hours that he respected Rajan’s decision.
The opposition attacked the Government for Rajan’s announcement and blamed the Government’s lack of respect for distinguished experts.