The Asian Age

So far, so good

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The sim­i­lar­ity of the high- volt­age im­pact that Prime Min­is­ter Naren­dra Modi and RBI gov­er­nor Raghu­ram Rajan had on the sen­ti­ment of the mar­kets and the econ­omy when they as­sumed their re­spec­tive posts is un­canny. Both hap­pened at a time when In­dia needed them as an an­ti­dote to the pol­icy paral­y­sis of the ear­lier gov­ern­ment.

Dr Rajan, who com­pletes one year in of­fice on Thurs­day, took over last year when the ru­pee was at its weak­est. He stopped its slide, sta­bilised it, and has now taken it higher against the dol­lar. Like Mr Modi, who gal­vanised the bu­reau­cracy and his min­is­ters, Dr Rajan shook up the staid RBI with his dy­namic per­son­al­ity and ideas. His achieve­ments — in­clud­ing be­ing chief economist at the IMF, pre­dict­ing the crash of 2008, be­ing an au­thor and almost a peo­ple’s economist — were things the RBI had not wit­nessed in decades. But he wore all this lightly as he set the agenda on what he would be do­ing on day one. Since then it has almost been a decision a day, keep­ing the RBI staff on their toes and set­ting the RBI in mis­sion mode. The mar­kets adored him and gave him the thumbs up like they did Mr Modi. The hon­ey­moon con­tin­ues. Business and in­dus­try is dis­ap­pointed at the high in­ter­est rates and Union fi­nance min­is­ter Arun Jait­ley hopes for a rate cut. But Dr Rajan is keep­ing ev­ery­one guess­ing about his next move as he en­ters his sec­ond year at the helm of In­dia’s cen­tral bank.

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