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Raghuram Rajan's ouster may further make the Indian economy volatile
It's another moral victory for BJP's Rajya Sabha MP Subramanian Swamy and RSS masterminds, the RBI governor Raghuram Gopal Rajan announced on Saturday that he would not be continuing for another term as the RBI governor, after his term expires on September 4.

Swamy had launched a series of attacks on Rajan a few days ago, demanding his ouster and even going to the extent of questioning his patriotism and accusing him of economic sabotage. Swamy had attacked Rajan for "wilfully recking" the Indian economy and of being "mentally not fully Indian".

The dignified Rajan had however chosen to remain silent over what Swamy had said, but now his sudden announcement of quiting has left the Indian inverstors unnerved. But, surprisingly even after the flurry of attacks on Rajan and his subsequent announcement of not continuing on the post, PM Modi has remained silent and has neither given him the customary two-year extension, which has been granted to all RBI governors in the last two decades.

Rajan, who had taken over the reins of the Reserve Bank of India in 2013 has expressed his desire to return to academics. Rajan is currently on leave from the University of Chicago, where he is professor of finance at the Booth School of Business.

Bankers are rarely compared with James Bond, the fictional British secret agent, but then, Raghuram Rajan is no ordinary banker. Rajan had taken over as RBI governor in 2013 when the Indian economy was marred with inflation and a sliding currency, and is credited for restoring India's macroeconomic stability. The Economic Times back then had carried a photoshopped image of Rajan as James Bond, brandishing a pistol of rupee notes, with the headline "Name's Rajan, Game's Bond".

Rajan's announcement could not have come at a more crucial time for India, as the referendum in UK on EU membership takes place on June 23, the outcome of which will have large scale implications on the Indian economy.

The markets are expected to be jittery from Monday onwards, owing to an uncertain future of RBI and the economy, as speculations heat up on who will succeed Rajan. Finance minister Arun Jaitley tweeted this weekend that the government will announce Rajan's successor soon.

Head of emerging market economies at JPMorgan, Jahangir Aziz says, "In a world which is so volatile and where there is a large degree of uncertainty, people gather around or are attracted to stability and he (Rajan) has epitomised."

According to analysts, the willingness of Narendra Modi of letting go of a capable individual like Rajan is going to force investors to rethink about Modi's administration and reassess to what extent he is serious about matching actions with words in transforming the Indian economy.

The 3-year tenure of Rajan was a mixed bag of successes and failures, although his opposers by far exceeded his supporters. He was criticised for his monetary policy, as he lowered interest rates, keeping the money markets gasping for liquidity.

But if Rajan had his lows, he even had his highs. He had sometime ago publicly lambasted Vijay Mallya, by reminding him that wilfull defaulters like him (Mallya) should not spend extravagantly on throwing lavish parties. Despite his achievements abroad, he still holds an Indian passport (I hope Dr Swamy is listening). Being the youngest chief economist ever of the International Monetary Fund, Rajan had predicted the financial meltdown much before it happened in 2007.

Rajan leaves RBI at a juncture when the role of a governor has diminished, especially with regards to monetary policies. The policies from now on would be decided by a committee along with the governor. The next governor would be largely looking after banking reforms.

A few popular names making rounds as successors of Rajan are of SBI chief Arundhati Bhattacharya, former CAG head Vinod Rai, chief economic advisor Arvind Subramanian and deputy governor Urjit Patel. Only time will tell who succeeds Rahguram Rajan and how his ouster impacts the Indian economy.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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