Ra­jan’s le­gacy

Pakistan Observer - - EDITORIALS & COMMENTS -

IN­DIA is un­der­go­ing a ‘Rexit’ de bate as the cen­tral bank gover nor has put in his pa­pers. Raghu­ram Ra­jan, how­ever, will long be re­mem­bered as he is leav­ing be­hind a mixed bag of suc­cesses and half-suc­cesses. His strat­egy to hire fresh tal­ent from the open mar­ket for more pol­icy re­search was shot down by the in­her­ent bu­reau­cracy, though. But his achieve­ments are over­whelm­ing. Three of his fun­da­men­tal ob­jec­tives to bring down in­fla­tion, bol­ster for­eign ex­change re­serves and widen the net­work of banks have met with huge suc­cess.

Of­ten dubbed as ‘in­fla­tion war­rior’, the Re­serve Bank of In­dia gov­er­nor suc­cess­fully ar­rested in­fla­tion and brought it down to 5.2 per cent in April 2016, from a stag­ger­ing dou­ble digit when he as­sumed of­fice in 2013. His le­gacy is that he hiked in­ter­est rates and changed the met­ric by which in­fla­tion is de­ter­mined. It was an ap­proach more com­monly known as mov­ing from whole­sale to con­sumer tar­get­ing. Like­wise, un­der his ten­ure, for­eign ex­change re­serves rose from $249 bil­lion to $359 bil­lion. One of the many re­grets Ra­jan will have is that he was un­able to act against large cor­po­rate de­fault­ers con­sid­ered as par­a­sites in the sys­tem. As the govern­ment readies to name his suc­ces­sor, there are fears that there will be a mass ex­o­dus of for­eign port­fo­lio in­vest­ments. The ra­tio­nale is that the young RBI gov­er­nor brought with him a sense of global cred­i­bil­ity, which his suc­ces­sor may not be able to re­tain. Ra­jan’s de­ci­sion to bow out has evoked strong re­ac­tions. Con­gress leader Rahul Gandhi took a shot at the Cen­tre say­ing Ra­jan’s exit will be a loss to In­dian econ­omy. He praised the gov­er­nor for steer­ing the econ­omy in dif­fi­cult times. This has put Fi­nance Min­is­ter Arun Jaitley in a fix, who con­tended by ad­mit­ting that Ra­jan’s good work is ap­pre­ci­ated. Un­doubt­edly, he has been an ex­tra­or­di­nary man­ager, as he leaves a le­gacy of eco­nomic sta­bil­ity. Prime Min­is­ter Naren­dra Modi, how­ever, be­lieves that it’s an ad­min­is­tra­tive is­sue, which can be bet­ter ad­dressed in Sept. But the point is that a firm word from govt ask­ing him to con­tinue will usher in a new era of con­fi­dence and sta­bil­ity. ‘Rex­ten­sion’ must re­place ‘Rexit’. Ra­jan has walked the talk. — Khaleej Times

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