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The Bharatiya Janata Party (BJP)-led National Democratic Alliance, if it comes to power at the Centre next month, is unlikely to take any decision on Raghuram Rajan’s continuation as the Reserve Bank of India Governor in haste.
On Thursday, Rajan on the sidelines of an event in Washington dismissed speculation of any differences with the BJP leadership. “I haven’t had any discussion with the new government. I think this is all press invented differences and I think it should be seen as such speculation rather than any actual differences”.
In New Delhi, party sources say the BJP views Rajan’s eight-month long stint as the RBI Governor positively. A senior party leader told Business Standard that the BJP appreciated that Rajan worked under enormous pressures from the finance ministry both as the chief economic adviser and later the RBI Governor. “Our understanding is that Rajan didn’t want to raise interest rates as frequently as the RBI did in end 2013 and beginning of 2014,” said the leader.
The leader also hinted that Rajan had his well wishers in the party. He said Rajan’s former teacher from Indian Institute of Management (Ahmedabad) and later the institute’s director Bakul Dholakia is likely to be an economist important in the scheme of things if Narendra Modi becomes the Prime Minister. “Modi turns to Dholakia often. Dholakia and Rajan share a good rapport,” said the party leader. Dholakia currently heads the Adani Institute of Infrastructure Management.
Senior BJP leader and leader of the opposition in Rajya Sabha Arun Jaitley, when asked about the fate of the RBI governor in an interview to a television channel in early-March had said he didn’t want to comment on individuals but added significantly said that “if somebody is doing a good job they will continue, but I don’t know”.
Rajan’s critics in the BJP, like party’s national treasurer Piyush Goyal, have also nuanced their assessment of the RBI governor. In February, Goyal had criticised Rajan for “aggravating” the problems of inflation and joblessness “and making it worse by increasing interest rates”. But earlier this month Goyal lauded Rajan for not increasing the interest rates. On April 1, Goyal said he was “glad that Dr. Rajan has not increased the rates and allowed the next government to take measures to sort out the mess in central government.” He also said that “both Rajan and his predecessor (D Subbarao) have been appealing to the government to take proactive measures to curb inflation and mere monetary policy intervention cannot sort out inflation.”
