Even as the countdown to his departure begins, outgoing Reserve Bank of India (RBI) governor Raghuram Rajan seems to be holding steadfastly to his policy of not lowering interest rates.
On Sunday, Rajan indicated that there is no rate cut likely in August when the central bank will review its monetary policy.
“This discussion keeps going on without any economic basis. You saw the CPI numbers just last week; 5.8% is the CPI inflation (in June), our policy rate is 6.5%,” Mint newspaper cited him as saying. “So, I am not sure where people say we are behind the curve. You have to tell me that somehow inflation is very low for us to be seen as behind the curve. So, I don’t really pay attention to this kind of dialogue,” the newspaper further cited Rajan as saying.
This is in keeping with Rajan’s hawkish stance on inflation, which he has sought to curb by keeping interest rates high, much to the chagrin of the industry and the government.
Last month, following a slew of controversial and unsubstantiated allegations made against Rajan by Bharatiya Janata Party (BJP) leader Subramanian Swamy, the RBI Governor had said that he would not seek a second term after his current tenure ends in September.
Ever since then the media has been buzzing with who might succeed Rajan, with names of at least 10 eminent economists, bureaucrats and bankers having been named as the probables. From State Bank of India chairperson Arundhati Bhattacharya to Chief Economic Advisor Arvind Subramanian to Rajan’s deputy Urjit Patel to former Comptroller and Auditor General Vinod Rai to the present economic affairs secretary Shaktikanta Das, every news report fuels further speculation on who might take the reigns at the RBI.
In fact, the media has been behaving in such a febrile manner on the issue that at least one reputed outlet went ahead and announced that Patel had made the cut, only to retract its report later.
The government, on its part, has remained silent on who the new governor could be, but has indicated that Rajan’s successor will be announced well before September.
(Aman Malik is Senior Assistant Editor at VCCircle.)
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