Jaitley takes on Rajan

With the on going launch of his recent book, titled ‘The Third Pillar’, the former RBI governor Raghuram Rajan, has been occupying national headlines, which he loves to. As an eminent economist, he has also been addressing and giving suggestions to all and sundry who seek his advice, whether it be school students, industry associations or for that matter to political parties too. His open endorsement of the proposed minimum guarantee scheme of the Congress called NYAY, made it clear that he was consulted on it, which he admitted, saying that though it maybe a political conversation, he can talk on any economic issue. He further fuelled speculation that he could be the next Finance Minister, if the Opposition came to power, saying that he was willing to take up any opportunity, if he could be of any use.

While Rajan has never hesitated in speaking his mind against the government, as in the case of demonetisation, the subject of RBI’s autonomy and the NPA crisis, with clearly political undertones, of late he has directly waded into such controversies. For example he doubts the government figures on GDP growth and jobs creation, saying that we need to restore the historical trust in these numbers. He thus doubts the economic statistics and says that something is not adding up properly, with investment not picking up, despite government claims of growth and capacity utilisation. He says that the RBI governor needs statutory protection, and also has an opinion on who should you vote for in the elections. Rajan says that democracy is crucial for India’s next growth phase, giving a feeling, as if it is under threat.

With all these statements, where he is clearly seen as taking sides, he continues to give his expert opinion on economic matters. He says that the proposed NYAY scheme of the Congress, needs a focussed targeting and that we need to create fiscal space for it, so that it does not become some kind of a permanent dole. He says that India is much better placed for the next phase of growth from a middle income nation to a rich one and that it is also poised for an agricultural revolution.

Rajan’s economic activism, with direct political undertones and taking sides, at a time when fiercely fought elections are on the cards, means that he is being directly consulted by the Congress and thus as far as the BJP is concerned, he is now in enemy territory. He has therefore come in Arun Jaitley’s line of fire, who says that when former RBI governors join the political fight, the cause for autonomy of the institutions itself gets hurt. He says that if this trend continues, it will become difficult for future governments to trust governors appointed by the earlier party, pointing out that RBI governors are not changed when regimes change, and that the BJP allowed Rajan, a full term. Thus according to Jaitley while Rajan is a very brilliant man, but after getting into the political thicket, if you make statements, then they are more political than economic. He defended the government data on which doubts have been cast by Raghuram Rajan of late.

While Raghuram Rajan has a right to express his erudite opinions, which have always been welcome, he has certainly now crossed the line of economics and has got into the cross hairs of political territory. As long as he was the expert commentator, with no taking sides, he had the credibility of an unbiased expert thinker. But with election on the cards and he being consulted by the Congress and he now being open to an office, certainly erodes his position of a neutral unbiased economist. He has got into the thick of politics and is unlikely to be spared by the politicians. It suits the Congress to get his stamp of approval on its NYAY scheme and criticism of the Modi regime, but the more he speaks for it, the more will be lose his credibility of being on unbiased independent thinker. Because if you are that, you will deny your availability for an office and you will also speak about the positives of the regime in power, which Dr. Rajan does not.