RBI Governor set to return to academia, Jaitley says govt respects Raghuram Rajan’s decision

RBI Governor Raghuram Rajan set to return to academia

New Delhi: Reserve Bank of India (RBI) Governor Raghuram Rajan on Saturday said that he would return to the academic world at the end of his term on September 4.

The RBI chief said he will always be available to serve his country when needed and asserted that his ‘successor’ would take the nation to new heights.

Finance Minister Arun Jaitley, who appreciated the ‘good work’ done by Rajan said that his successor would be announced ‘shortly’, however, asserted that the Centre respects Raghuram Rajan’s decision to leave his post as the Reserve Bank of India (RBI) Governor on the completion of his term this year.

The Finance Minister said, “Dr Raghuram Rajan has announced his intention to go back to academics at the end of his current assignment. The Government appreciates the good work done by him and respects his decision. A decision on his successor would be announced shortly.”
Jaitley said on his Facebook page.

However, former home minister P Chidamabaram lashed out at the Centre afor inviting this development, and said: “I am disappointed and profoundly saddened by the decision of Dr Raghuram Rajan to leave the RBI on completion of his term on September 4, 2016, but I hasten to add that I am not surprised at all.”

Rajan is currently on leave from the Chicago Booth School of Business where he holds the post of Distinguished Service Professor of Finance.

Issuing a statement on Saturday, Rajan said: “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.”

“I am confident my successor will take us to new heights with your help. I will still be working with you for the next couple of months, but let me thank all of you in the RBI family in advance for your dedicated work and unflinching support. It has been a fantastic journey together!” the statement said.

Rajan, who took the office in September 2013 as the 23rd RBI Governor, stated that the Indian currency was plunging daily, inflation was high and growth was weak and that India was then deemed one of the “Fragile Five”.

Stating he feels proud that the RBI has successfully delivered on all these proposals, Rajan added that a new inflation-focused framework is in place that has helped halve inflation and allowed the savers to earn positive real interest rates on deposits after a long time.

He further said that the Indian currency stabilized after the actions of his team, adding India’s foreign exchange reserves are at a record high.

Talking about the RBI’s achievements under his leadership, he said that his team has worked on an enabling framework for National Payments Corporation of India to roll out the Universal Payment Interface, which will soon ‘revolutionize mobile to mobile payments’ in the country.

Asserting that there is still a lot to be done, Rajan reportedly said that inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed and that international developments also pose some risks in the short-term.

Rajan said, “We have made adequate preparations for the repayment of Foreign Currency Non-Resident (B) deposits and their outflow, managed properly, should largely be a non-event. Morale at the Bank is high because of your accomplishments. I am sure the reforms the government is undertaking, together with what will be done by you and other regulators, will build on this platform and reflect in greater job growth and prosperity for our people in the years to come.”

Last month, BJP leader Subramanian Swamy had triggered speculation by asking the Centre to deny Rajan a second term, saying his hawkish policies have ruined the Indian economy.

In his letter to Prime Minister Narendra Modi, Swamy had accused Rajan of ‘harming the nation’s economy’ and claimed that the latter was acting more as a disrupter of the Indian economy than the person, who wants the Indian economy to improve.

Swamy had then said Rajan is in India on a Green Card and is, therefore, ‘mentally not fully Indian.’

However, Infosys founder Narayan Murthy later added his voice to the chorus of support for Rajan, saying the central bank chief should be offered two more terms in recognition of his track record in steering monetary policy.

Reacting over the RBI chief’s decision to not continue with his current post after the end of his tenure,former CEO and chairman of the Royal Bank of Scotland in India, Meera Sanyal, said that Rajan needed to be at the helm of affairs as uncertain times loomed ahead in the global economy.

Sanyal said, “this is going to extremely harmful for the Indian economy. We are entering a period of instability, with Britain’s exit vote set for next week and oil prices instability. There is a period of uncertainty ahead for the global economy and the Indian economy. And at such times, Raghuram Rajan not being in the position, would be quite harmful for us.”

(With Agency Inputs)

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