RAJAN’S EXIT. Done in by his comments on policy and polity

The ruling party’s discomfort with RBI Governor Raghuram Rajan was not just about rate cuts and his “foreign education,” but his public comments on policy and political issues, including the debate over perceived intolerance, the ‘Make in India’ camnpaign and, specifically, his speech titled “Democracy, Inclusion and Prosperity” at the DD Kosambi Ideas festival in Goa in February 2015.

Sources in the government told  BusinessLine  that although Prime Minister Narendra Modi and Finance Minister Arun Jaitley “actively discouraged” party members and Ministers from responding to the RBI Governor’s comments, the collective feeling was that Rajan was disparaging of the ruling establishment.

Making a specific reference to three of Rajan’s public interventions, a Union Minister said, “The PM told us to be quiet and not comment on this matter at a Cabinet meeting. But a lot of us felt that the ‘Hitler’ simile was completely uncalled for.  Kya matlab hai yeh  (what is the meaning of such statements?)” The peeve was that “strong government” –– which the present establishment believes is synonymous with Narendra Modi –– had been contextualised with the mention of “Hitler” by the RBI Governor.

Rajan had, while delivering his speech at the DD Kosambi Ideas festival, said: “Strong governments may not, however, move in the right direction. Hitler provided Germany with extremely effective administration: the trains ran on time, as did the trains during our own Emergency in 1975-77. His was a strong government, but Hitler took Germany efficiently and determinedly on a path to ruin, overriding the rule of law and dispensing with elections.”

The other sore point was the note of caution that the RBI Governor struck on the excessive focus on manufacturing and export-led growth. It was perceived as disparaging of the PM’s focus on “Make in India”.

“At a time when the PM is personally leading the campaign on the theme of ‘Make in India’, such comments by the RBI Governor only serve to discourage international investors,” said sources.

There was discontent in the BJP and the government over the RBI Governor’s public comments in defence of “protection, not of specific ideas and traditions, but the right to question and challenge, the right to behave differently so long as it does not hurt others seriously” at a time when the government was facing public outrage against beef-eating, love jihad and ghar-wapasi  campaigns by the BJP’s ideological affiliates.

It also did not help the RBI Governor’s case that he had the support of former Finance Minister P Chidambaram and big industrial groups.

“He was beholden to the former regime. And we have never seen the kind of campaign one has seen from the industry to back him,” said a senior Minister.  

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