Now, Narayana Murthy says Raghuram Rajan deserves 2 more terms

Five key voices that came out in support of the RBI governor

NR Narayana Murthy has voiced his support for Reserve Bank of India (RBI) Governor Raghuram Rajan and said that Rajan should be offered two more terms based on his track record, reported the Economic Times on Thursday. 

According to the financial daily, Murthy, who co-founded Infosys, said, "India should be very fortunate to have him (Rajan) serve this country for not just one, I would say two more terms."

The remarks come barely a month after Rajan's second term as the chief of the central bank came into question over comments made by Bharatiya Janata Party MP Subramanian Swamy.

In May this year, Swamy had written to Prime Minister Narendra Modi seeking Rajan's immediate sacking while alleging that he was "mentally not fully Indian" and had "wilfully" wrecked the economy.

"The reason why I recommend this is that I am shocked by the wilful and apparently deliberate attempt by Dr Rajan to wreck the Indian economy," Swamy wrote, adding that Rajan's concept of raising interest rates to contain inflation was "disastrous".

On May 12, Swamy, in his first salvo against Rajan, had said: "In my opinion, RBI governor is not appropriate for the country. I don't want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country."

Murthy, however, is not alone in contradicting Swamy's stand. 

Here are the other voices which have come out in support of Rajan: 

1) Rahul Bajaj

"I believe Rajan should get an extension for more reasons than one," said Rahul Bajaj, chairman, Bajaj group. "During the last few years, he has been the best Reserve Bank governor. I have agreed with his interest rate policy to control inflation even though many of my industry colleagues had a different view."

He added: "Rajan has substantially enhanced the reputation of the RBI, not only in India but internationally. He is well known as a tough economist with a great track record."

2) Adi Godrej

Adi Godrej, chairman, Godrej group, came out in support of Rajan as the latter battled barbs from Swamy. Godrej said that an extension of Rajan's term would benefit the country.

"He is very well respected across the world. He is a very capable person and I think if his term is extended then it's a good thing for India," Godrej said in New Delhi. "He was voted as best Central Bank Governor in the world by one of the magazines. I am his admirer and support his extension."

3) Assocham

Late last month, the Associated Chambers of Commerce and Industry of India (Assocham) said that the RBI had played a "pivotal role" in ensuring India's growth and in the absence of some "serious offence" an incumbent (Rajan) should not be "targeted". 

"Surely, it is the prerogative of the government to appoint and re-appoint a person to the coveted position of RBI governor, but the kind of media statements being issued about Raghuram Rajan do not augur well for the country's financial system," Assocham said without naming Swamy. 

Leading entrepreneurs are of the opinion that Rajan did a good job in checking rising prices, helped rebuild the banking system in the country and stabilised the rupee in the last three years.

Harsh Mariwala (Chairman of Marico), Sajjan Jindal (Chairman of JSW group) and Harsh Goenka (Chairman of RPG Enterprises) have also voiced their appreciation for Rajan's performance. 

4) Mark Mobius

Mark Mobius, executive chairman, Templeton Emerging Markets Group, praised Rajan's performance in an exclusive interview with Business Standard earlier this month.

Responding to a question over what signals would denying Rajan an extension send to the rest of the world, Mobius said: "In the global banking world Rajan has probably been the best. He has been the voice of reason and logic. We hope we can keep him on. If he is replaced with a politically-oriented person then the reaction will not be very good. But if it is somebody with a good reputation and who has a history of independence, then it should not be a problem." 

5) Christopher Wood

Mobius, of course, is not alone in his views on matter. The global investing community, including the likes of Christopher Wood (Managing director & equity strategist, CLSA) and Jan Lambregts (Managing director and global head of financial markets research, Rabobank International), has been all praise for the RBI governor.

Wood, for his part, has gone ahead and said that the biggest risk to the Indian bond and currency markets will be if Rajan is not given a second term. Wood has pointed out Rajan’s strict monitoring and actions in controlling non-performing loans.