5 times Raghuram Rajan clashed with the political establishment

Raghuram Rajan's three-year-term as the RBI Governor will come to end on September 4. Rajan, the 23rd RBI Governor will only become the first guv since 1992 to have a term of less than three years. But in terms of media coverage, Rajan probably hogged more limelight than most of his predecessors. In part, it was because of  his illustrative track record as he was one of the rare economist who correctly predicted the global slowdown way back in 2005. Rajan also was the toast of his media for his articulate speeches, nuanced arguments and his dapper looks. 

But it was Rajan's penchant for calling a spade a spade that often found him colliding with the political establishment. 

Here's five times when political establishment had a fight with Raghuram Rajan

1. Subramanian Swamy's hostile tirade: 

Subramanian Swamy was at the forefront of handful of people who wanted Rajan to be out of RBI's top echelons. In his letters to PM Modi, he called for Rajan's ouster saying,  the governor is “mentally not fully Indian” and has “wilfully” wrecked the economy. “The  reason why I recommend this is that I am shocked by the wilful and apparently deliberate attempt by Dr. Rajan to wreck the Indian  economy,” he wrote adding his concept of raising interest rates to contain inflation was “disastrous”.

Rajan mostly kept dignified silence on this matter but in an interview to NDTV said, "there are certain allegations which are  fundamentally wrong and baseless" and addressing them would amount to giving them legitimacy". He further said that he "welcomes genuine criticism of our policy but will not address ad hominem attacks" or allegations against him  as individual instead of the policies and the position he holds.

2. Rajan's clash with Finance Ministry 

Policy rates have been Achilles heels of relationship between the RBI governor and Finance Minister for a long time, and it was no different with Rajan. While Jaitley and Rajan didn't publicly exchange jibes like Chidambaram and Subbarao used to do, yet the North  Block wasn't happy with Rajan's raising rates. 

Rajan, however, tried hard to convince that they wanted to help establish a credibility to RBI's ability to reign-in inflation and  once he was confident of the shift in the trajectory, started lowering the rates. In the letter, Rajan said the RBI has cut the key rates by 1.50 per cent since taking the accomodatory stance in January 2015.

Jaitley and Rajan also differed on whether India can replace China as a driver of global growth.  Jaitley said that India can replace China as a driver of global growth and  Chief Economic Adviser Arvind Subramanian said that China's slowdown is a historic  opportunity for India to relaunch growth in India.

On the contrary Raghuram Rajan said that it will be a "long time" before India can replace China as a growth engine for global economy even before it grows at a faster rate.  Rajan effectively pricked the bubble saying, "India is one-fourth to one-fifth of China's size. Even if we can overtake China in terms of growth rates, the magnitude of  the effect will be far smaller for a long time to come."

3. Intolerance debate: 

Rajan weighed in on the intolerance debate, further ruffling feathers of the establishment. Speaking at IIT Delhi Rajan impressed on how  tolerance is essential for economic progress. He said, " Tolerance means not being so insecure about one’s ideas that one cannot  subject them to challenge – it implies a degree of detachment that is absolutely necessary for mature debate. Finally, respect  requires that in the rare case when an idea is tightly associated with a group’s core personality, we are extra careful about challenging it.". It was a pretty bold statement from the RBI chief considering the entire award wapsi controversy based on the intolerance debate that dented the credibility of the Modi government. 

4. Aandho mein kana raja

When Rajan was asked about whether India is the bright spot in the global economy, his comment was interpreted in a negative way by the media and politicians alike. “I think we have still to get to a place where we feel satisfied. We have this saying – ‘In the land  of the blind, the one-eyed man is king’. We are a little bit that way.”  The comments translated in Hindi meant Rajan describing India as Andho mein kana raja- which has a negative connotation. Several BJP leaders and union ministers criticised Rajan for his statement. 

5.  Make for India not make in India: 

In early 2015, Rajan had a word of caution about PM Modi's flagship Make in India project when he said it assumes an export-driven path like China and focus should be on Make for India-i.e to manufacture goods for the local markets. 

Jaitley though rejected this concern saying,"Whether Make in India is made for consumers within India or outside is not so relevant.  The principle today says that consumers across the world likes to purchase products which are cheaper and are of good quality. They  hire services which are cheaper and good quality".