From Bimal Jalan to Raghuram Rajan, speculation rules RBI guv appointments - Hindustan Times
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From Bimal Jalan to Raghuram Rajan, speculation rules RBI guv appointments

ByHT Correspondents
Jul 19, 2016 07:47 AM IST

NEW DELHI/MUMBAI: Who will replace Raghuram G Rajan as the new Reserve Bank of India (RBI) governor? The discussion about India’s likely new central bank chief has moved from banking, bureaucratic and academic circles to the living rooms.

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The feverish speculation has been partly aided by Rajan’s no-holds-barred views on so-called “political” issues like tolerance and BJP MP Subramanian Swamy’s scathing criticism about the RBI chief.

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The former Chicago University professor, well-known for foreseeing the impending financial crisis of 2008, and who famously said three years ago that his job as RBI governor was not to collect ‘Facebook Likes’, has a rockstar status among India’ s educated middle class for not hesitating to air his views on even non-economic matters.

The run-up to Rajan’s predecessor D Subbarao’s appointment at the Mint Street in 2008, too, was rife with speculation.

He was named RBI governor came on September 2, 2008, just three days before he was to take over. A “shortlist” of possible candidates, from former deputy governor Rakesh Mohan to former finance secretary Adarsh Kishore had done the rounds.

Even the appointment of YV Reddy, who was deputy governor before taking over as chief in 2003, has had its share speculation on a reported shortlist of candidates that included the then finance secretary S Narayan, among others.

Likewise, in 1997, the then finance secretary, Montek Singh Ahluwalia and Planning Commission member Arjun Sengupta were speculated to be strong contenders for the governor’s post in 1997. But Bimal Jalan, the then planning commission member secretary, got the job.

“A last-minute phone call from VP Singh (former Prime Minister) to Deve Gowda (the then Prime Minister in 1997), we were told, changed everything. Jalan was picked for the job ,” Mitu Sengupta, daughter of Ar jun Sengupta, wrote in a tribute after her father’s death in 2010.

Conversations about interest rates and inflation have become more commonplace now than before, as the impact of policy reforms, initiated 25 years ago, becomes visible, and as global integration gets embedded in India’s social psyche.

Experts say this reflects a certain “mainstreaming” of RBI as an institution and also of an expanding money market.

The intense speculation on who would rule RBI building on Mint Road in Mumbai began even before Rajan wrote his now famous letter to RBI employees last month, expressing a wish to return to academia.

The list of possible candidates, drawn up in newsrooms across Mumbai and Delhi, has ranged from international economists to bankers to deputy governor sand senior officials of Niti Aayog.

A former public sector bank head puts the blame on the selection mechanism and on the media, in that order. “If there were clarity that the next RBI head would come from select pools—the finance ministry, Niti Aayog or from the RBI itself — this speculation would not have been there. In the US, it is more predictable and the succession is assured long before the incumbent’s term expires.”

The US President nominates seven persons to be members of the US Federal Reserve board of governors for a full term of 14 years. The chair and vice-chair are nominated from these governors for four-year terms, which can be later extended.

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