Rumours are flying thick and fast and Reserve Bank of India (RBI) governor Raghuram Rajan's reappointment is bang in the centre of them all. On Wednesday a Reuters report alluded to the fact that Prime Minister Narendra Modi is firmly in his side while a story in the Bengali daily Anandabazar Patrika also on Wednesday said that Rajan has reportedly written to Modi to relieve him of his duties after his term ends this September.
According to ABP, the RBI governor wants to return to the US to pursue his academic career.. Rajan was a Professor of Financeat the Chicago University's Booth School of Business before taking charge as the RBI supremo. His family has already left for the US, the newspaper reported. According to the Bengali daily, Modi, despite strong opposition from senior BJP leader Subramanian Swamy, is reluctant to relieve Rajan after the end of term and wants him to continue as the RBI chief for a second term. Finance minister Arun Jaitleyhas has also reportedly come forward in support of Rajan. The newspaper also said that Jaitley is of the view that if Rajan is removed upon completion of his term, it may send out negative vibes to the national and international business community. Also, the policy and the outlook which the RBI took under Rajan's command, has aided the country's GDP growth.
Reuters on the other hand says,"...In 2014, Finance ministry officials were frustrated by Rajan's reluctance to cut interest rates to stimulate growth and moves were afoot to ease him out of the job. Some were airing their reservations about Rajan in the media. Prime Minister Narendra Modi convened a meeting of senior finance ministry staff that December (2015) to hear their complaints, at the end, the leader delivered a stern message: do not indulge in a public spat with the central bank. The moment marked a turning point in ties between the heads of the newly installed government and the RBI. Since then, Modi and Rajan have developed a close working rapport."
The Reuters report further adds, ""Rajan will get another term and he will accept it," said Arvind Mayaram, former finance secretary who Rajan worked with closely first as the government's chief economic adviser and then as RBI governor. "He is well entrenched in India's political economy."
There is no official word from the PM, FM, Rajan or the RBI on these developments yet.
