Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday said he did not quote private conversation in his book, ‘I Do What I Do’, except on demonetization in the introduction to set the record straight on it as the Parliament had a right to know what actually happened.
Speaking at the launch in Chennai of his book, 'I do what I do' which he described as essentially a compilation of the speeches he delivered as the RBI Governor, Rajan said it was not a tell-all book and did not quote private conversation except on demonetization in the introduction.
“One issue that I have mentioned in the introduction is about demonetization. The reason I mentioned it is because there were questions asked by the Parliamentary Standing Committee to which responses were given and some of the guarded responses that came out. Of course we know that many of these committees leak. The responses that came out did not seem to have accord with my recollection of what exactly happened. So I wanted to set the records straight. Just because the Parliament has right to know what in fact response of RBI in this,” he said.
Rajan has revealed he had warned the government against demonetization. "Although there may be long-term benefits, I felt the likely short-term economic costs would outweigh them, and felt there were potentially better alternatives to achieve the main goals," he writes in his book. "I made these views known in no uncertain terms."
On the government’s relations with the RBI, he said that personally, he had enjoyed a substantial degree of independence from any interference in his functioning. “I basically had a fair amount of independence… I worked with two governments,” Rajan said, adding that there was a lot of talk in public about RBI-government tensions but focus on tension missed the cooperation between them.
Rajan recalled when he took over as Governor of the RBI in September 2013 the Indian economy was in dire straits. Inflation was running high, the current account deficit was at an all-time high and the rupee was falling precipitously in value, he said, adding that the RBI had just blown up a lot of its forex reserves in trying to fix the problem. "In 2013 India was labeled as part of the fragile 5 and I spent a month drawing up plans about how to stabilize the economy," he said.
"I was advised to concentrate on inflation control, everything else would fall into place." Rajan said that when he exited the RBI three years later after successfully reining in price rise, he handed his successor telling Urjit Patel a small memento: A symbol of the Rupee with the words 'Hamari Zimmedari' (our responsibility) inscribed underneath. Rajan told Patel that to protect the value of the currency was the most important function of the central bank.
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