Raghuram Rajan’s exit: Another blow to middle class’ faith in Narendra Modi govt

After much speculation, muck racking and unsubstantiated hints, Raghuram Rajan announced a dignified exit from the top job at the Reserve Bank of India. In his own inimitable style, Rajan laid down his achievements of the past three years in a letter to his colleagues before dropping the bombshell that after due reflection and consultation with the government he had decided to return to academia. In a cryptic manner, Rajan made it clear that he had unfinished business but he hadn’t been given a green signal by the political authority to continue further.

Whether Rajan’s exit has a short or mid-term effect on India’s economy is a matter of speculation. No individual is bigger than the institution and RBI as a robust institution will probably endure the shock effectively and prosper in future under worthy successors. But how will Rexit affect the Modi government's optics? Ironically Rajan’s announcement came on a day when news broke about Chetan Chauhan being appointed NIFT director, a move difficult to fathom or explain even for hardcore Modi fans. Former cricketer Chauhan took on the mantle himself by saying that he had banking experience! This comes in a week when CBFC and its chief Pahlaj Nihalani were making headlines for their sanskari scissors, trying to implement random cuts in Udta Punjab, before the Bombay High Court stepped in and brought an end to the theatre of absurd.

The point is that the Modi government is increasingly being seen as dangling carrots in front of inept people for jobs they are barely fit to do. Often the only criterion they seem to fit is that their ideological leanings align with the rulers in power. Rajan being virtually hounded out has to be looked at in this context. Any elected government has the right to appoint their ‘own’ people. No one can deny them that, but there need to be checks and balances so that the right people are appointed. Worthy dissenting voices also need to be nurtured so that policy making doesn’t just become consensus in echo chambers.

By all accounts, Rajan did a good job. He tamed the devil of inflation, started the practice of cleaning up bank books and waged a war against crony capitalists. He became a voice of reason among the shrill hyperboles dealing in binaries. His sobering thoughts on the comparison between India and China as emerging global powers or cutting through the hoopla of Make in India were sane interventions, a much-needed reality check one should expect from a central bank chief. At no point did he lack in deferential respect towards the political establishment, acknowledging their due contribution in policy making. Yet Rajan became the first governor in more than two decades to be denied an extension. His announcement was preceded by weeks of intense mud-slinging where BJP MP Subramanian Swamy sniped with unchartered freedom at the former IMF chief economist, calling him "mentally not Indian", accusing him of destroying MSME with high rates and even levelling accusations of money laundering at him. The BJP on its part disassociated themselves from Swamy’s allegations, but there not a single rebuke directed at their Rajya Sabha MP.

Modi final broke the silence in his Wall Street Journal interview saying: “I don’t think this administrative subject can be an issue for the media. And that issue is only in September, not now.”

But it was BJP which made it a public spectacle and came out cutting a sorry face in the entire saga, with Rajan having the final word. The government could have handed the matter deftly and discreetly, avoiding such a mess.

There are reports that RSS and allied organisations were sceptical of Rajan’s US credentials. That raises the question of whether the government is indeed serious about reversing brain drain. Is PM Modi sincere in his appeals at Madison Square Garden or Wembley where he asks successful Indians to come back and contribute to India’s growth story? Branding successful professionals as apologists just because they were not appointed by the party is amateurish and churlish, to say the least.

A big part of PM Modi’s appeal in the run-up to 2014 general elections was his fervent appeal to break the nexus of crony capitalists, the stranglehold of the 'Ma-bete ki sarkar'. He promised a clean government, talent nurturing, a break from the Congress-style modus operandi of governance where complete allegiance to a family was the unquestioned norm. Sadly, shunting out talented people just because they have a mind of their own gives exactly the opposite message. The more things change, the more they remain the same in Lutyens Delhi. Meritocracy and genuine concern for the nation can go for a toss. Rajan brought much-needed credibility to the RBI at a time the Indian economy was going through a downturn. In easing him off, PM Modi has definitely failed to read the Mann ki Baat of average Indians, who respect bright, honest, erudite professionals doing their job with passion.