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Rajan has been known to speak his mind. In December 2014, he was openly critical of Modi's Make in India initiative, saying that an import substitution strategy or an incentive driven export led growth mechanism will not work for India.
Finance minister Jaitley had, however rejected Rajan's criticism.
Earlier, in June 2014, Rajan, in a strongly worded remark, had trashed the recommendation by the Financial Sector Legislative Reforms Commission (FSLRC), to set up a uniform regulator, calling it “somewhat schizophrenic.”
Then, in February 2015, Rajan again caused more than a flutter, when he went beyond his brief and, in what was perceived to be a political remark, spoke about excesses by strong regimes leading to an ineffective government. “However, necessary government function is sometimes hard to distinguish from excess. We will have to strengthen government (and regulatory) capability resisting the temptation to implant layers and layers of checks and balances even before capacity has taken root,” Rajan had said.
Then, in November last year, Rajan waded into the nationwide debate on intolerance, saying that India's future economic prospects depended on how intellectually free its society was. “India’s tradition of debate and an open spirit of inquiry is critical for its economic progress,” he said while addressing students at the Indian Institute of Technology (IIT), Delhi, his alma mater.
In January 2016, when Rajan publicly chastised loan defaulters for public display of wealth, both chief economic advisor Arvind Subramanian and NITI Aayog member Bibek Debroy openly differed with him on the issue. Irrespective of the merits of Rajan's views, his “deep surgery” on bad loans revealed that half the lenders did not report their stressed assets. The so-called Asset Quality Review (AQR) by the RBI has shown that government-owned banks are not the only culprits when it comes to under-reporting bad loans, and that private banks were equally culpable.
As mentioned earlier, India Inc. seems to have thrown its weight behind Rajan.
Earlier this week The Economic Times cited Uday Kotak, the executive vice-president and managing director of Kotak Mahindra Bank said that a central banker like Rajan should be insulated from politics. “The RBI (governor's) position should be apolitical fundamentally," the report cited him as saying.
Earlier, Adi Godrej, chairman of the Godrej Group said that he supported a second term for Rajan. "I think he has done a good job. He is very well-respected across the world. He is a very capable person, very well-respected person and I think if his term is extended then its a good thing for India" Godrej had told PTI.
Rahul Bajaj, chairman of the Bajaj Group told the Business Standard newspaper that he, too, wanted Rajan to continue as the RBI chief. "I believe Rajan should get an extension for more reasons than one." Bajaj added that "Rajan has substantially enhanced the reputation of the RBI, not only in India but internationally. He is well known as a tough economist with a great track record."
The same report also cited Harsh Mariwala, chairman, Marico as saying that Rajan has had a great track record. “Rajan is going about finishing his unfinished agenda. At this stage, to change to someone else would mean shifting gears. It is better Rajan completes his journey over the next term," he is cited as having said.
Sajjan Jindal, chairman, JSW Group, too, came out in Rajan's support in the same report. "India's central bank is one of the best in the world with the RBI governor at the forefront...Rajan's contribution to the Indian economy is immense," he added.
"Raghuram Rajan has had an admirable term as RBI governor. He has instilled confidence domestically and globally, too, has earned praise for his astute handling of monetary policy,” Harsh Goenka, chairman of RPG Enterprises, told Business Standard.
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