............. In the last 25 years, the working relationship between the government represented by the finance minister and RBI governors may not have always been smooth. Yet, despite frosty ties, especially towards the fag end of the tenures of at least more than one governor, the political establishment has held back perhaps mindful of the downside to cutting the institution and its head to size. Former finance minister, Yashwant Sinha is one of those who is quick to dismiss such speculation. A new government should not rock the boat and change the head of the central bank, he says, making it clear that he reckons Rajan is doing well and would distinguish himself further. ...........
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This discussion serves one-perhaps only one- purpose. It gives an opportunity to those who are not generally RBI-watchers and to those who are really serious about understanding the ‘equation’ between RBI Governor and the finance ministry to ponder deeper. Suffice to say that the debate may not affect the continuity at Mint Road or more specifically the broad policy perspectives of RBI. In retrospect- as one who had argued that, in the circumstances that prevailed in July 2013, it was in the fitness of things to allow another year’s extension for Dr Subbarao- it seems the decision to shift Dr Raghuram Rajan in August-September 2013 to Mint Road was right and has served the purpose of having at least one person at the top who can take charge of the leadership in the Indian Economy when most others were unsure about their own survival. Dr Rajan who has been doing his homework for the position that was waiting for him, is by now well prepared to ensure a ‘consensus’ approach in policy matters where he has a say. This is evident first from the chapter “Afterword: What Lies Ahead for India” he added to his book Fault Lines during the early years of this decade read together with his recent speeches and observations.
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