New Delhi, June 19 (IANS) India Inc on Sunday recalled the “outstanding contribution” of Reserve Bank of India Governor Raghuram Rajan following his decision not to seek the second term, and hoped an able replacement for him will be found.
“Contribution made by RBI Governor Raghuram Rajan is exemplary and has been a huge factor in confidence building at a challenging time in the Indian economy,” Harshavardhan Neotia, President of Federation of Indian Chambers of Commerce and Industry (Ficci), said in a statement here.
“Many structural changes initiated by the RBI Governor, be it in banking regulations, monetary policy or exchange rate, will have positive impact on the economy going forward and he will always be remembered for his outstanding contribution,” he said.
“We are sure government will soon find an able hand to continue the good work done by the present RBI governor when his term gets over,” Neotia added.
Rajan on Saturday told his colleagues that he is not keen on a second term at the helm of the country’s central bank and will return to the academia when his tenure ends in September.
Rajan became RBI Governor in 2013 at a time when the US Federal Reserve had declared its intent to wind down its stimulus programme and the rupee had plunged in value in respect of the US dollar on fears of a spiralling current account deficit.
In a series of measures, Rajan managed to stabilize the currency that also brought back investors.
Given Rajan’s international stature, various policymakers and economists have expressed disappointment at Rajan’s decision not to seek a second term and said it would prove costly for the Indian economy.
“Raghuram Rajan’s decision not to seek second term would be very costly for the economy. Not a good omen,” tweeted former Finance Secretary Arvind Mayaram.
“We are losing one of the most skilful financial economic thinkers in the world. It is sad for the country and it is sad for the government of the country too. RBI is not a completely autonomous institution,” Nobel laureate Amartya Sen said in a TV interview on Saturday.
“His (Rajan’s) decisive policy actions based on robust analysis and deep understanding of the underlying causes have contributed significantly to changing perceptions about the strength of the Indian economy,” Christopher Jeffery, editor of British magazine Central Banking, said while giving Rajan their ‘Central Banker of the Year’ award last year.
Rajan had predicted the 2008 markets crash caused by the housing market crisis in the US that put its economy into deep recession, setting off a global slowdown. In 2011, he published the acclaimed book “Fault Lines: How Hidden Fractures Still Threaten the World Economy”.
Rajan’s colleague at Chicago University Booth School of Business, Luigi Zingales termed it is a “huge loss for India”.
“Rajan leaves RBI to come back to Booth. A great gain for us, a huge loss for India,” he tweeted.
Terming it as unfortunate, business chamber Assocham hoped Rajan could be persuaded to reconsider his decision.
It will be the first time in 24 years that the RBI governor has departed after a single three-year term.
In this context, it is being felt that the the government’s failure to retain Rajan will be seen by the world as India’s non-approval of his policy against inflation and the huge stressed assets of the banking sector.