Bureaucrats with an economics degree or A practicing economist?Introduction:
The cards are being played well just in time when the government expects an exit of the RBI Governor Raghuram Rajan. BJP lawmaker and economist by degree, Subramanian Swamy takes all the dig that he could on the very efficient Raghuram Rajan, a practicing economist and professor of finance at the University of Chicago Booth School of Business before he was sworn in as the governor of the Reserve Bank of India in 2013.
Swamy has attacked Rajan on various grounds such as being “not fully Indian” and hurting the economy of the country. Rajan’s term of office ends this September but Swamy’s interference could make it an early exit and close doors for renewing his term of office.
The clash between Swamy and Rajan is something to look forward to for many – one is a person with huge wealth of knowledge in every field while the other has been quite successful in hinting the right pace to Indian economy and for the right guidance towards raising the value of rupee.Practicing economist:1. Fighting inflation:
Raghuram Rajan’s biggest achievement till date for the Indian economy was his strong determination and impeccable policies for fighting inflation. Retail inflation was at 9.8% in the September 2013 and it went down to 3.70% in July 2015, the lowest since the nineties. Wholesale inflation also saw an epic lowering of -4.05% in the same year. His beliefs on how high inflation is more deadly than tight money is right in every way.2. Interest rates:
Rajan is mostly criticized for raising the interest rates but from the point of view of stabilizing the economy first and then slowly moving towards lowering rates, his decisions have always stood the test of time and came out to be better. Easy money could deform investment decisions and the consequence would be useless and wasteful allocation of investment in the economy. In a way Rajan did the right thing to stop the exploitation of resources.3. No mass appeasement strategies:
The very difference between Rajan and Swamy is their approach towards matter – one does it for making the Indian economy stronger and the later is all about proving how Rajan is not completely Indian and not showering money on people unlike the politicians who know well how to extend their term of office. India needs people who do the right thing for the economy of the nation without worrying about how unpleased the top notch politicians would be.4. Banking reforms:
Banking reforms like adoption of consumer price index (CPI), the chief indicator of inflation according to global norms is not something that politicians with economics degree could think of mastering. India’s forex reserve is far stronger now compared to what it was before September 2013. He has time and again intervened and shown that his capabilities are all that India needs for a better tomorrow of its economy. And let’s not forget that PM Modi lauded Rajan’s capabilities openly.5. Better banking:
Licensing of two universal banks and affirmation to eleven payment banks – all these came under the efforts of Rajan’s sincerity towards making it better for Indian banking. Banking facilities have reached out to far ends where people were deprived of basic facilities. Many popular and safeguarded changes have been introduced, which have proved time and again that a practicing economist with a flair for his work is what we are in desperate need of rather than politics and economics combined to create controversy at every go.6. Long term goals:
The governments come and go but what remains to be taken forever is the economy of the country from a long term perspective. An RBI governor has a tough job to keep the economy stable or growing while the government may not agree with his strategies. He is more of a guide to the government. Bureaucrat with an economics degree:1. Considering all spheres that get affected:
While Rajan in his overexerted concern towards inflation kept on raising the interest rates, he failed to acknowledge that the effects would be severe on common people, small and medium industries, as rightly pointed out by Subramanian Swamy. SMEs generated jobs for common people and hence industrial growth went down because the SMEs were shut. The general consequences of the action would only be considered by a bureaucrat with an understanding of economics since he does need the acknowledgement of common people to stay in power.2. Nationality issues:
Swamy’s concern on Rajan’s nationality is not completely out of reference. Rajan has been renewing his Green Card regularly with annual visits to US. His mentality seems somewhat divided. His interests are more of a global economist than of the RBI governor. His actions have been proved to be disruptive as rightly pointed out by Swamy. He has been the speaker on financial issues globally, which explains why his roots are more global than nationalist in nature.3. Exposing scams:
Swamy’s contribution to exposing the 2G scam has been commendable. The SC cancelled all those licensed issued by Raja and imposed the Rs. 50 million fine. In National Herald scam, Swamy was the only one to take the stand and establish his case in 2 courts. He is one to fight the Aircel Maxis scam against ther former Finance minister of UPA. He took to stand against Deputy Chief Minister Manish Sisodia for favoring the private firm which was a VAT defaulter. Conclusion:
Besides being the knowledgeable man who exposed scams, sniffed foul play wherever necessary and took stands against what he thought to be fishy, Swamy’s grounds would still be considered as that of promoting Hindutva as his first priority. His stand against the present RBI Governor comes from the fact that Rajan was appointed by erstwhile UPA government and Swamy is all for promoting the interests of his own party politics. PM has time and again praised Rajan yet chooses to remain silent while accusations are being made by his own party member. Swamy’s caliber as an economist is not to be ignored by his real intentions behind spiteful comments on Rajan on how he should be sent back to Chicago just because he holds his Green card intact, smells of foul politics too.
Rajan is undoubtedly the most sought after economist India has and it would be a great loss to have him gone.