RRR r from R

You would have made out what the header stands for. Most of you would have. Raghuram Rajan’s note to his RBI colleagues is here. Well, technically, he has not resigned but said that he would not seek a second term.

On 2nd June, a good friend forwarded this article and asked us what we would do, if we were in RR’s shoes:

This is what I wrote:

dear XXXXi,

Coming to the question, in this situation, if I were RR, what would I do?

Now, in putting myself into his position, I can only go by the publicly known facts. My decision to stay or to leave would very much depend on how much support my boss actually gave me (even if only in private) during this phase. Did he call me and reassure me that this was not authorised by him, that he did not approve of it, that he has confidence in me, that he would like me to stay and that he would sort this out?

If my boss tried to stop the attacks, how come SS released another letter in three days?

When my boss was asked about my continuation (WSJ interview), he actually waved it off! Now, all of a sudden, an article appears in all newspapers telling me and the world how proud my boss is, of me. How do I know that it is not a good cop-bad cop routine?

One sign of his support would be to announce the reappointment now. In normal circumstances, it might be announced only late in August. But, these are not normal times. A statement from the boss would have put an end to all speculation about my position and, more importantly, concern about the sanctity of certain posts and institutions.

Since, based on publicly available information, it appears that the boss did not do any of the above, I would leave. I just am not sure that I have his confidence and support, not just now, but for the coming period too.

I wish my successor good luck, My hunch is that he might need lots of it.

My previous posts on the RR – RBI – SS episode are here:

One thought on “RRR r from R

  1. Your views are clear and forthright and I fully appreciate that Swamy has scored several self goals for the GOI.

    Notwithstanding your views, the continuation of Mr.RR rajan has become untenable due to the following “perception” problems.

    1)Even good bankers incl. some top bankers who are now entrusted with the unenviable task of scavenging in leading PSUs due to high NPAs have taken a public posturing that PSU bank models are under threat due to the relentless pursuit of Rajan..According to them many of the loans were either given due to political connections or political compulsions during the earlier regime and whether policy paralysis killed the business or wilful abrogation by the promoters caused this, is a matter of dispute.They even go to the extent of saying that he is a good economist but not a suave banker at heart.(Swamy accuses he is not an Indian at heart!)

    2)Many in the middle class have started believing what Swamy says- that this man is the reason for interest rates on borrowings not coming down sharply and for PSU banks being in bad shape, not understanding/having inclination to understand the root cause of the problem.Some of them are saying if UPA were the cause why this cleaning up was not done in 2013-14 itself and why it was dragged till now.Mallya’s case has become now household anecdote for cheating on loans and Rajan along with Jaitley & Modi, is held responsible for letting the situation to come to this pass.This one thing has lent lot of credence to the accusations of Swamy

    3)On the contrary many senior citizens have also started vocally accusing Rajan for reducing the interest rates on Savings in banks and nobody on the street is buying his “dosa economics” logic since it does not help a pension drawing person in distress, despite being correct.(Swamy has conveniently not addressed this problem -when interest rates are brought down sharply)

    4)Many Congress leaders like Mani shankar Iyer, Kapil sibal, Abhishek singhvi,PC have taken potshots at Modi & GOI standing on his shoulders and unknowingly or is it knowingly(?) conveying a message that he is our man amidst you and thereby constantly causing discomfiture to Modi & co.In fact I would accuse Congress for using Rajan as a pawn in their scheme of things against Modi. His choice of words and metaphors ,everything was manipulated by Congress to set him against Modi& co.

    So I would say even though losing Rajan at this stage is a big blow to the country, the atmosphere has become so vitiated that his continuation would have been a burden to Modi & co due to these “perception” issues among the people at large.These points are not in the mainstream media and not openly discussed.

    In order to salvage the situation Modi & co will have to appoint a good successor


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