The post of RBI Governor should not be dragged into avoidable controversies unless serious offence has been committed by an incumbent, the ASSOCHAM has said, contending the central bank has played a pivotal role in bringing about a macroeconomic stability for India, making it the best among the emerging markets.
“Surely, it is the prerogative of the government to appoint and re-appoint a person to the coveted position of RBI Governor, but the kind of media statements being issued about Dr Raghuram Rajan by senior politicians do not augur well for the country’s financial system, which is passing through a challenging time because of unprecedented levels of stressed assets in the banks”, the chamber said.
It said Dr Rajan enjoys an impeccable track record as a top order world economist while he has brought in loads of respect and goodwill to the Indian financial system as head of the Reserve Bank of India. The current account deficit has been brought down to a record level despite a huge fall in the merchandise exports, though a sharp drop in the import bill did help. As compared to currencies of the other emerging economies, the Indian rupee has performed exceedingly well.
As far as monetary policy is concerned, to be fair to him Dr Rajan did drop the policy Repo rates by about 150 basis points, which the banks have not transmitted it fully.
While one can argue about the inflation staying an obsession of the RBI, the central bank has been mandated by the targets of inflation set by an agreement set by the Finance Ministry. Besides, the RBI has been talking about sustainable growth trajectory, rather than infusing a bubble into an over-leveraged economy, the chamber said.
The ASSOCHAM would only urge restraint on the part of the senior politicians and others and leave it to the good wisdom and judgement of the Prime Minister Mr Narendra Modi so far as the re-appointment of Dr Governor is concerned.
Certain amount of dignity must be attached to the post, especially when India is on the verge of a big leap into the economic growth, after two years of dealing with global upheavals and domestic issues like successive droughts.