Jaitley vs Rajan is a media creation

Interestingly, it's not even half as intense as Chidambaram vs Subbarao

The demands and aims of their respective jobs mean that the Finance Minister and the Reserve Bank Governor, under whichever ruling dispensation, tend to be at loggerheads from time to time.

While one of the objectives of the FM is to ensure that the economy is on a growth slope and investments keep coming in, some of the monetary policy steps that an RBI governor may have to take to curb inflationary pressure does lead to higher interest rates, which in turn may not be wholly conducive to investing.

The policy journalists out of New Delhi and Mumbai lap up any hint of a difference between the two most powerful posts in India’s financial system. And reporting is usually fair and unbiased. However, there are instances when differences are artificially created and played up. That is what seems to have happened in the case of Arun Jaitley and Raghuram Rajan, the two men with formidable reputations and challenges even bigger than their achievements so far.

In December, when Rajan made a pitch for ‘making in India, for India,’ the media (including Business Standard) gave it a spin of him cautioning Narendra Modi on his pet “Make in India” initiative. I was there, and no way did it sound like the RBI Governor was taking on the Prime Minister. What it was, was a studied, reasonable call for India to not follow the China model of export-driven manufacturing. That makes sense because the global consumer demand is very different now than when it was during the start of China's boom a couple of decades ago. I can't stress this enough, it wasn't critical of Modi's pet initiative. (Read the speech here)

And when later that month, Jaitley spoke about making India a manufacturing hub, irrespective of whether it be a export driven or domestic consumption driven model, the media took it as a retort to Rajan’s earlier speech.

To be fair, it was a little overblown, so much so that Jaitley wrote a blog on his facebook page, stating that “…in the competitive world of journalism, reporters are always looking for an “angle”. Where none exists, the speech itself can be twisted to create one.” (Jaitley’s ‘Make in India’ speech here)

Just earlier this week, when Minister of State for Finance Jayant Sinha was asked in an interview about the difference between North Block and Mint Road on interest rates, he was at pains to explain that both were on the same page, that Rajan knew his stuff, and that the centre would not question the globally-respected economist on his decisions.

Speaking from experience one can say that there is hardly any ‘Jaitley vs Rajan’, at least when compared to ‘Chidambaram vs Subbarao’. Now that was vicious and it was out in the public. Many people will remember Chidambaram’s infamous statement in 2012, when inflation was a huge concern, but so was a debilitating slowdown in the economy: “Growth is as much a challenge as inflation. If government has to walk alone to face the challenge of growth, then we will walk alone,” he said, hours after Subbarao’s RBI announced that it would leave key policy rates unchanged. 

“I haven’t read last few paragraphs of the (RBI) statement but if it holds out hope for the future I look forward to that future,” Chidambaram told reporters, rather sarcastically. To his credit, Subbarao, a seasoned bureaucrat, held is own and did not crumble under pressure. That was an open hostility, without any attempt to present a ‘same page’ front. That was Finance Ministry/Government vs RBI. This isn’t.