..........Dr. Rajan brings to the job a degree of intellectual capital, perhaps unmatched by any of his predecessors. Still, in reconciling divergent views and revisiting his own, he has his work cut out. He must know by now that no RBI governor can afford to antagonise the finance ministry beyond a point. Nor can he afford to alienate the RBI community, one that is legitimately proud of its traditions and expertise and its standing in the world of regulators.
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Saturday, August 24, 2013
The new note on Mint Street
..........Dr. Rajan brings to the job a degree of intellectual capital, perhaps unmatched by any of his predecessors. Still, in reconciling divergent views and revisiting his own, he has his work cut out. He must know by now that no RBI governor can afford to antagonise the finance ministry beyond a point. Nor can he afford to alienate the RBI community, one that is legitimately proud of its traditions and expertise and its standing in the world of regulators.
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This is an excellent role analysis for Dr Rajan, the RBI Governor-Designate.
RBI has been functioning in an uneasy environment for some time now mainly because FM and some officials in his ministry have been asserting GOI’s ownership rights on the central bank. RBI’s work culture and the maturity shown by the RBI Governor and his team, in a way, avoided an open clash in the recent period. The coming days will be more tough from the relationship angle for Mint Road and North Block, as the new RBI Governor has not been through the ‘IAS’ diplomatic experience.
Dr Rajan’s challenges lie in (a) how fast he will be able to ‘unlearn’ the IMF lessons and (b) how quickly he will get convinced about the historic dual role of RBI to ensure distributive justice and supporting economic growth and will be able to reframe his arguments to convince North Block that after all RBI has been on the right path and get the necessary support from GOI.
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