Raghuram Rajan says no to 2nd RBI term; Jaitley assures next appointment soon, Congress says 'govt didn't deserve him'

The decision of Reserve Bank of India (RBI) Governor Raghuram Rajan not to serve a second term, once his present term ends on September 4, has caused a political storm.

Raghuram Rajan says no to 2nd RBI term; Jaitley assures next appointment soon, Congress says 'govt didn't deserve him'

Zee Media Bureau

New Delhi: The decision of Reserve Bank of India (RBI) Governor Raghuram Rajan not to serve a second term, once his present term ends, has caused a political storm.

Governor Raghuram Govind Rajan formally told his colleagues on Saturday that he is not keen on a second term at the helm of the country`s central bank and will return to academia when his tenure ends in September 4.​

Rajan`s decision was conveyed in an 888-word letter by him to the RBI staff, one in which he has listed what the central bank has managed to achieve in the past three years and what remains to be done, although that process has also been initiated.

Reflecting on his term as the 23rd governor of the central bank since September 2013 -- which has seen praise and also a fair share of criticism -- Rajan said the agenda pursued by his team was to help nurse India back on the path of recovery first, and then growth, and keep prices in check.


He went on to allude that much was accomplished, even as a part of that onerous task remained a work in progress -- while also indicating that he was ready to see that through as well, but eventually decided against it.

Political Reactions

Finance Minister Arun Jaitley tried to play down by saying that the government appreciates the "good work" done by RBI Governor Raghuram Rajan and decision regarding appointment of his successor will be taken soon.Jaitley in a Facebook post had lauded Rajan saying, "Dr Raghuram Rajan has announced his intention to go back to academics at the end of his current assignment. The government appreciates the good work done by him and respects his decision.A decision on his successor would be announced shortly. ”

BJP spokesperson G V L Narasimha Rao declined to offer comments.


"BJP generally do not offer political comments on any office of independent regulator or Constitutional positions," he said.

However, veteran Congress leader P Chidambaram and former Finance Minister, during whose term Rajan was appointed, lashed at the ruling NDA government saying it didn't deserve person of his stature. He said in statement, "I am disappointed and profoundly saddened by the decision of Dr Raghuram Rajan to leave the RBI on completion of his term on September 4, 2016, but I hasten to add that I am not surprised at all.” He added that it was a 'craftily planned campaign of insinuations, baseless allegations and puerile attacks on a distinguished academic and economist` which led to Rajan`s announcement.

Congress spokesperson Manish Tewari said the government had "hounded" a good man as it did not have the courage to ask him to leave. "The message that this fascist government is sending to regulators is that if you do not toe our line we will mount a campaign of calumny and wild insinuations and bludgeon you into submission. What Rajan has done is what any self- respecting man under such circumstances will do," he said. Rajan had done a phenomenal work, he said.

D Raja of CPI asked the government to explain if the charges Swamy levelled against Rajan were "genuine or justified". "What about charges levelled by Swamy against Rajan. The Prime Minister and Finance Minister should explain if they agree with it or they let down Rajan."


Meanwhile, BJP MP Subramanian Swamy who had constantly targeted Rajan during the last few weeks said that the Reserve Bank head is a government employee and is not selected on the basis of popular vote.


"Raghuram Rajan is an employee of the Government of India. We don't select employees on the basis of popular vote," he said, reacting to Rajan's decision not to take a second term.

India Inc 'saddened' by Rajan's decision 

Top industry leaders said RBI Governor Raghuram Rajan's decision not to take a second term will be "nation's loss" as he brought economic stability and enhanced India's credibility on the world stage.

India Inc led by Anand Mahindra, Deepak Parekh, NR Narayana Murthy, Kiran Mazumdar-Shaw, Mohandas Pai hoped that Rajan's successor will continue with the 'good work' he did, although industry chambers CII and FICCI declined to comment.


Reacting to the development, Mahindra & Mahindra Chairman Anand Mahindra said he was "saddened" to hear about Rajan's decsion to opt for academia at the end of his current term.

"In my travels around the world and encounters with leading overases businessmen it became clear that during his tenure he greatly enhanced the credibility and bankability of India. I trust that a successor will be found who will continue and enhance the great work done by Governor Rajan," Mahindra said.

HDFC Chairman Deepak Parekh said: "It's a pity to lose him. I'm wondering what has precipitated this action by the governor. I am sure the government, at the right time, would have considered giving him another two years term as most governors have got."

Murthy, who had pitched for at least two more terms for Rajan, expressed sadness over the development and said Rajan deserved more dignity than what he was treated with.

Similarly, Biocon Chairperson & Managing Director Kiran Mazumdar-Shaw tweeted: "RBI Gov Raghuram Rajan not seeking second term - Academic gain, RBI loss. He leaves a legacy of economic stability."

Adi Godrej, who had earlier supported Rajan's second term, declined to comment.

Mohandas Pai said in a tweet that it is a "very sad day for us great talent driven away by alcontents,cronies...Deeply concerned."

RPG Enterprises Chairman Harsh Goenka tweeted: "Globally acknowledged. Inflation warrior. Economic guru. Independent mind. Bank surgeon. #RaghuramRajan leaving is a loss to the nation."

Eminent banker Meera Sanyal tweeted: "Academia's gain is India's loss : Gov Rajan to return to Chicago on Sept 16. Swamy gets his way at the cost of India."

Former Chief Economic Advisor Kaushik Basu tweeted: "Raghu has been one of the finest central bank governors anywhere."

Infosys' Indian-origin CEO Vishal Sikka said Raghuram Rajan has been "outstanding" as RBI Governor and he being a green-card holder should not be an issue.

"I am here (as Infosys CEO). I am a US citizen. I don't think he (Rajan) was a US citizen but I am a US citizen. Be that as it is phir bhi dil hai Hindustani (I am an Indian at heart). That is what should count," Sikka said.

Describing RBI Governor Raghuram Rajan as a person of very high caliber, State Bank of India chief Arundhati Bhattacharya said he has given a large measure of credibility to the central bank.

"Dr Rajan is a person of very high caliber, who has built ably on the reputation of our central bank and given it a very large measure of credibility," she said in a statement.

(With agency inputs)