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Tweakonomics: Guv gaffe

MANASI PHADKE | Updated on January 20, 2018

RBI Governor Raghuram Rajan   -  PTI

The metaphorical faux pas of the RBI governor

What happens when you cross metaphors with economic ideologies? Controversies, as the RBI governor discovered after calling the Indian economy a one-eyed king in the land of the blind. Many an eye popped with disapproval, many an eyebrow was raised delicately, many a pert nose wrinkled in metaphorical distaste, and all hell broke loose.

Miffed, the commerce minister sniffed at the choice of words. Jayant Sinha too got into the fray with gusto claiming that to confuse the shining star with the shining one-eye was so not done. The FM, who after the Budget debate on Times Now, has discovered the lethal power of silencing loud critics with statistics, merely chose to say in a clipped, dignified fashion that 7.5 per cent growth rate is enough to get celebrating. It’s rather unfair, to get so righteous about metaphors after having used them profusely through sher-o-shaayari to take interesting potshots at the Opposition during Budget speeches.

Just as the NDA was busy meta-reacting to the poor governor, Mani Shankar Aiyar, much to the delight of the UPA, chose to give his opinion. He converted the metaphor into an allegory to claim that the PM is the one-eyed king, causing an allergetic or allegoristic reaction all across the NDA.

The UPA has gleefully decided that henceforth, every RBI monetary policy review will be followed by a press release personally crafted by Aiyar. The RBI, which on normal days issues good monetary guidance, and on special occasions, well, issues good monetary guidance for variety, is really not used to such excitement and adrenalin. Recoiling in complete horror, it is currently debating whether the Indian economy won’t be better off with only one review every eight years, rather than eight reviews every year.

Meanwhile, there was a kahaani mein twist as P Chidambaram chose to support the governor. Does the excitement never end? The commerce minister dished back her criticism, no holds barred. State of the economy notwithstanding, this has now become a full-fledged fight between the commerce minister and Chidambaram, whereas the RBI governor has decided to quit giving speeches for a while and just stick to good ol' monetary guidance.

Metaphorically speaking, the entire controversy is also perhaps indicative of the differences in the delivery mechanisms of the fiscal and monetary policies. The fiscal policy is passed as an Act of the Parliament; its tone does not lend itself to interpretation, its clauses have to be spelt out in black and white. The monetary policy, in the Indian context, has always treaded that fine line between growth and inflation; in that sense, it has been more interpretative, more guidance-oriented. It’s kind of a déjà vu, that as inflation-targeting pushes monetary policy into a more concrete format, the RBI governor faces ire for having been metaphorical in stating the state of the economy vis-a-vis the globe.

It was Alan Greenspan who had famously remarked, “I know you think you understand what you thought I said but I’m not sure you realise what you heard is not what I meant.” The governor may not have been in concurrence with the expansionary monetary policy Greenspan unleashed on the US, but even he will not be able to find a fault line in this particular statement by Greenspan.

The writer is a Pune-based economist

Published on May 01, 2016

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