The Finance Ministry remained tight-lipped on the issue of Reserve Bank of India Governor Raghuram Rajan getting a second term.
“As of now, there is no decision. His term will come to an end in September,” said a source privy to the development.
In a letter to the RBI staff, Rajan has said that “after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016”.
If he decides to return to the University of Chicago from where he is on leave, he will have the shortest term since S Venkitaramanan who served for two years between December 1990 and 1992 as the central bank governor. Since then, most RBI governors have served for at least four to five years.
While serving and former RBI officers refused to speak on the issue, others perceive Rajan has decided to withdraw himself from the race for a second term and thrown the ball for re-appointment in the government’s court.
“Markets will certainly react on Monday. The RBI Governor seems to have indicated that he will take up a second term based on the government’s decision to offer him the position,” said an analyst.
Despite his hawkish stance on key rates, India Inc has however, supported a second term for Rajan.
“Globally acknowledged. Inflation warrior. Economic guru. Independent mind. Bank surgeon. Raghuram Rajan leaving is a loss to the nation,” tweeted Harsh Goenka, chairman, RPG Enterprises.
Globally acknowledged. Inflation warrior. Economic guru. Independent mind. Bank surgeon. #RaghuramRajan leaving is a loss to the nation.
— Harsh Goenka (@hvgoenka) June 18, 2016
Kiran Mazumdar Shaw, Chairman and Managing Director of Biocon, tweeted, “RBI Governor Raghuram Rajan not seeking second term - academic gain. RBI loss. He leaves a legacy of economic stability.”
RBI Gov Raghuram Rajan Not Seeking Second Term - Academic gain. RBI loss He leaves a legacy of economic stability https://t.co/K1eXosOosg
— Kiran Mazumdar Shaw (@kiranshaw) June 18, 2016
Samir Arora, Fund Manager, Helios Capital, said, “It’s a sad day for how we deal with talent. India is a big country with a billion people so nothing matters cannot be the logic all our lives.”