The statement by RBI governor Raghuram Rajan was a relative statement about the economy in comparison to the rest of the world economy and he was right about it (The statement by RBI governor Raghuram Rajan was a relative statement about the economy in comparison to the rest of the world economy and he was right about it)
The statement by RBI governor Raghuram Rajan was a relative statement about the economy in comparison to the rest of the world economy and he was right about it (The statement by RBI governor Raghuram Rajan was a relative statement about the economy in comparison to the rest of the world economy and he was right about it)

The one-eyed king and the land of big hearts

Political, business and thought leaders should take care to ensure that society does not become the land of the blind-hearted

I touched down in India on Tuesday to soak in the Indian summer at least for a week, from Chennai to Delhi with Coimbatore and Jaipur thrown in for additional effects. Until I met with a good friend on Tuesday evening, I had not realised that the governor of the Reserve Bank of India Raghuram Rajan had ruffled a few feathers again. My friend too was upset about the remark that the governor had made, referring to the Indian economy as a one-eyed king in the world of the blind. Until he told me that, I had not felt anything was untoward or wrong about the message. I listened to him politely and left.

On Wednesday morning, I was on a flight to Coimbatore. My co-passenger had diligently collected so many newspapers that it was easy for me to catch up with all the things that were making the headlines in India. Almost all newspapers had correctly led with the story of the drought in ten states with about 330 million Indians affected. However, there have also been stories of how the government was not pleased with the remark that the RBI governor had made. The minister for commerce had suggested that the RBI governor choose his metaphors carefully. Apparently, with his own brand of toxic mischief, Mani Shankar Aiyar had queried as to who the one-eyed king was. Looks like, in the scorching Indian summer, more than prickly heat, prickly hearts are the problem.

The statement by the RBI governor was a relative statement about the economy in comparison to the rest of the world economy and he was right about it. In the past, especially in the 2004-07 period India used to crow so much about its rapid economic growth that it was embarrassing for many of us who felt that it was not sustainable. It turned out that way. The economy is yet to recover from the fallout of how it grew in that period. Now, India is growing again but there are some still reasonable doubts about the growth statistics.

In the past, the RBI governor had commented on government’s policies such as ‘Make in India’ in public. This columnist too had noted that such policy advice was more effectively rendered in private than in public. Also, his reference to how most things worked well in Hitler’s Germany was liable to be misinterpreted and it was. However, two factors have to be kept in mind.

One is that the governor is a public intellectual who does express his views on many aspects of public policy – both domestic and global. In a public lecture in Basel in June 2013, he said that international bankers had a reputation between a conman and a pimp. In another lecture in 2014 at the Brookings Institution, he took on the Western central banks for their monetary policies calling them out for stealthily depreciating their exchange rates. In fact, after the recent RBI monetary policy meeting, in an interview to Bloomberg television, he had said that central banks in advanced countries would take their Quantitative Easing (QE) policies to QE infinity. He also said that it was not right for them to scale back their plans to normalise their interest rates every time the stock market wobbled. Incidentally, some of these comments against Western institutions and markets expose the ridiculous perception in some quarters that he is out to curry favour with the West at the expense of India! Back home in India, he had commented on industrialists defaulting on loans and living lavishly. He had pushed banks to come clean with their bad loans. He is an ‘equal opportunity offender’ but with a purpose.

That actually brings us to our second factor. It is one thing to take offence when government policies are criticised publicly by officials who are part of the government but it is another thing to expect everyone to be a cheerleader for the government and the country. This government rightly took credit for strengthening the federal framework by devolving substantial resources as per the Fourteenth Finance Commission recommendations. It followed it up in this year’s budget with devolution to local governments. These things strengthen the institutional foundations of the democracy. Similarly, it should boldly announce that it would expect, encourage and empower (as the case may be) the Chief Economic Advisor, the Vice-Chairman of NITI Aayog and the RBI governor to act as ‘risk managers’ and ‘devil’s advocates’ for the government. Among other things, their roles should be to ask questions, explode myths and puncture halos. The government should be grateful for the respectable voices from within that warn about risks and caution against disproportionate euphoria. The great Tamil saint Thiruvalluvar has said that such a government cannot be defeated by any enemy.

The economy may be a one-eyed king. But, political, business and thought leaders should take care to ensure that the society does not become the land of the blind-hearted. For its own sake and the country, the government should set an example to make India a land of big hearts.

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