Home / Opinion / What does Raghuram Rajan’s exit tell us about the Modi sarkar?

In the last couple of months, we have witnessed the spectacle of the intellectual hero that is the Bharatiya Janata Party’s Rajya Sabha MP, Subramanian Swamy, take on and vanquish the intellectual Raghuram Rajan, the governor of the Reserve Bank of India. While this will go down as yet another feather in Swamy’s giant-killing cap, for Rajan, this should be an occasion to reflect on the vagaries of public policymaking in India.

If you stop taking sides, you would easily see that what Swamy pulled off is quite spectacular. He took on the head of an aspiring economy’s central bank, a man with impeccable academic credentials and a stellar record in the economics profession (having got more predictions right than wrong). Also, critically, Rajan enjoyed that all-important factor in the fate of economies these days—positive perception among the pundits. Add to that the man’s charm which prompted the coinage of terms such as ‘dosanomics’ by an adoring media.

Put together, Rajan was intellectually sharp, charming and outspoken. As Shashi Tharoor learnt earlier, that is a fatal combination in India, especially in electoral politics. This episode tells us that whether in electoral politics, or outside it, you cannot pull off wearing a personality that makes you stand out in a crowd.

A mere mortal may have been deterred by all of this—but not Swamy. His attacks were sharp, measured and went largely unchallenged except for a perfunctory word here and there from Prime Minister Narendra Modi and Finance Minister Jaitley (not dissimilar to those that have been uttered before in response to, say, attacks on minorities). Swamy’s Twitter-fandom cheered him on, and in the end, when victory was his, he issued pithy statements that fully reflected the enormity of his success. The Art of War could not have scripted this battle better. The outcome suits the worthies in the Modi Sarkar as well, and it tells us that with the right tools, you can get your work done without sullying your own hands.

Also read: India will miss Raghuram Rajan as teacher more than as banker

So, where does this leave our economy now? There are real fears that with a job as unfinished as it is with our economy—for instance, the push towards cleaning up the balance sheets of public sector banks—this development could see the economy slide. It is important to remember that almost every international analyst who has stoked the story of ‘India being a bright spot in the global gloom’ has also pointed out the dangers of the spiralling non-performing assets.

As evident from Rajan’s quest to clean up our banking system, this is not only a technical challenge, but also deeply political one. One can only hope that the next RBI governor will be equal to the task, but Rajan’s fate ensures that his successor would tread extremely cautiously on this matter. This outcome suits all the status quo-ists—among them, several key players in the Indian economy, including the Modi Sarkar.

Also read: The lessons from the Raghuram Rajan affair

Finally, op-eds from those sympathetic to the government and Swamy’s efforts have been quick to seize on Rajan’s outspokenness as the cause for this exit. In their view, the RBI governor and other such key positions must be an ally to the government, and stay within their brief. At best, this would give us Arvind Subramanian (chief economic aadvisor), and at worst, Pahlaj Nihlani (Central Board of Film Certification chairman). Rajan on the other hand, is being accused of not being part of the euphoria over the now-once-again-shining India, and instead, making cautionary statements such as “In the land of the blind, the one-eyed man is king"—or for expressing his views on political corruption and ‘intolerance’. When civil society and individual artists can be vilified the way they often are, what hope did the RBI governor–whose salary is paid by the government of India–have?

Also read: Swamy hails Raghuram Rajan’s exit as liberation for India economy

India is a country ravaged by a never-ending stream of institutional failures. Our Parliament does not function, law and order operates according to political whims, the top judiciary seems to veer out of control, and so on. The list is depressingly long and endemic to our daily lives. So, we take our heroes where we can find them. The Election Commission remains a redeeming feature of our democracy, although political parties seem to have figured out how to stay within the letter of the law while violating its spirit with impunity. The Reserve Bank of India, largely due to its independent-thinking governor, has been another shining light–but one that the government now has seen fit to dim.

To come back to my original question: after everything that has passed in the last two years, what does Raghuram Rajan’s exit tell us about the Modi Sarkar? Nothing new at all!

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