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Business News/ Opinion / Online-views/  Raghuram Rajan and the ‘governator’ phenomenon

Raghuram Rajan and the ‘governator’ phenomenon

The frenzy surrounding Rajan's appointment as RBI governor should have made us reflect on reasons for this idolatry

Raghuram Rajan, governor of the Reserve Bank of India. Photo: Indranil Bhoumik/MintPremium
Raghuram Rajan, governor of the Reserve Bank of India. Photo: Indranil Bhoumik/Mint

It seems like a distant memory now, but just a few months ago, we saw a Narendra Modi-or Arvind Kejriwal-type frenzy in the financial markets.

Here he came, hugged his outgoing predecessor, shook hands with colleagues and went to a press conference to announce a slew of revolutionary measures. The governator had landed; well, not quite from an exotic aircraft but a Toyota Innova, but let’s not have small details spoil the big fun.

A social media-challenged neo-Luddite like this author had to take the help of a savvy friend to understand the term. He smiled at my naïveté, and explained that Governator is the geometric mean of Governor, Eliminator, Terminator and Superman. Why not arithmetic mean, I persisted. His smile broadened as he said that would do grave injustice to the person in question.

Even for someone who is accustomed to being in the media glare, this adulation would have scared the wits out of Raghuram Rajan. In addition to the vibes mentioned above, sobriquets such as destiny’s child and beginner’s luck were given to him. Women including a 60-something socialite swooned over his George Clooney looks. Nary a thought was given to why of all things the handsomeness of an RBI governor should be a topic of any discussion, or that the man himself felt uncomfortable with the metaphors.

Those who were impressed with the governor’s swashbuckling first-day announcements should also bear a few facts in mind. RBI is a team, and policy formulation was not just Rajan’s solo. Second, many of those were statements of intent rather than decisions, like bank licences by January. Third, Rajan was a formal governor-designate (as officer on special duty) for a few weeks prior to actual appointment, so the announcements were not concocted in a jiffy.

Is the excitement primarily over a relatively young RBI governor? Check failed. Relative youth may be the holy grail when compared with public sector bank CEOs who attain that position only a few years away from retirement, but this is also a country where a 63-year-old Narendra Modi is supposedly a youth icon and the 43-year-old Rahul Gandhi widely ridiculed. Barring the odd exception, Indians unconditionally consider age and experience worthy of reverence.

Is it the unequivocally impeccable academic and professional credentials? Check failed again. Ditto has been the case with most of his predecessors, though admittedly Rajan has the additional foreign tag.

Let’s dig deeper. Was it respect for being outspoken and critical of the government? For those who may not be aware, it is fabled that some years ago Rajan had criticised the government in front of Prime Minister Manmohan Singh, and the latter, a consummate academician himself, liked Rajan’s views, which was instrumental in him getting the job (first at chief economic adviser and then as RBI governor). The story may be apocryphal, but nonetheless, check failed again. Y.V. Reddy and D. Subbarao, too, had made tiffs with the finance ministry not just legendary but habitual. None of the two was exactly adored for that.

This phenomenon is possibly symptomatic of the democracy in retreat syndrome, as argued elegantly in his eponymous book by Joshua Kurlantzick (council on foreign relations). Whereas India has been fortunate in averting the more violent manifestations of this syndrome, “...dissatisfaction can lead to citizens looking to other, unelected actors to resolve political problems."

Prima facie an unremarkable observation, except for the fact that for illustrating this point, the author chooses the example of only India, in a book otherwise strewn with instances from the developing world. “ comprehensive survey...found that less than 50% of Indians trusted political parties, but...had instead placed high degrees of trust in their country’s judiciary and nonpartisan Election Commission...Even so, the Indian hunger strikers..., who openly disdained the political system,...drew large middle class crowds...".

In reality it has gone a step further. Let us be candid—we are still in the yada yada hi dharmasya mode. Deep down in us, we harbour expectations of individuals causing miracles to end our problems. While this expectation has been typically centred on saints earlier and political leaders later, it is indeed a sad commentary on how far our core institutions have atrophied or compromised that parts of the general populace now adore a central bank governor, not just the central bank. Just imagine Janet Yellen’s consternation if on her appointment as US Federal Reserve chief she were to be described as cute or a vampire slayer.

Come to think of it, much as Rajan will be relieved that this euphoria has now ebbed, he could also be feeling sad about it.

The author has been a research analyst on financial services as well as other sectors at various investment banks, and is currently an independent consultant focusing on banks and financial services.

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Published: 12 Mar 2014, 12:57 PM IST
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