Slander

Why should I be writing any on this when the chapter is over and everyone from top economists to Bollywood stars have expressed their views.

Just pouring my thoughts out and nothing else.

First, when Raghuram Rajan’s appointment was announced as the Governor of Reserve Bank of India Subramaniam Swamy and his supporters started a campaign saying Rajan was an American citizen and hence should not be allowed to occupy one of the most important posts in the country.

If Raghuram Rajan was indeed an American citizen either at the time of appointment or was found so later when the party supported by Swamy came to power, how difficult was it for them to establish that and sack him.

Is this country so poor with its record keeping, that a simple fact like Raghuram Rajan’s passport could not be verified. Rajan said he has always held only Indian passport and didn’t take any other citizenship ever. Our MEA cannot verify if this is fact or not in a day?

If Rajan was accused of being not an Indian for having studied in foreign universities, worked abroad, then why should an Aravind Subramanian or an Urijit Patel accept this job – they may face a similar campaign if they land the job?

Second, Swamy and his friends said Rajan hid the facts about who is father was and his role as one of the top officers at RAW who had to face an unceremonial exit under Rajiv Gandhi.

Well, all the papers of Rajan that are available on the the US university websites all write his full name – Raghuram Govinda Rajan, so did he hide his father’s name?

They say Rajan’s education was all funded by CIA, and that he is an US mole in Indian administration. Well if CIA can give me a forward contract, to write the course for my daughter’s education to make her RBI governor or IMF head 25 years hence, God I would be the American stooge without any hesitation.

Our intelligence must be such morons if they have allowed a foreign intelligence to dictate our country’s top appointments – we are nothing more than a banana republic.

Third, Rajan didn’t cut interest rates intentionally to stifle the economy and push the growth rate down is the argument – well, I am not an economist and going to look at this only as a lay person, but covered financial markets once.

At the height of 2008 crisis in the US I asked an expert what should be done to tackle the excess leverage the system had created there, he said nothing more but to hike rates.

If India’s growth was slowing down after 2008 global economic crisis triggered by American sub-prime problem, what was the solution, cut rates and spur growth.

We did that too, didn’t we, but how long can the easy money policy sustain? To the extent of building up American sub-prime kind of a bubble?

Swami and his friends are an eclectic combination of right wing economists and “Swadeshi” economists. They on the one hand want PPF, SS interest rates to remain high but want loan rates to be continuously lowered. 

They are proud of the fact that India has one of the highest savings ratio and yet don’t want the savers to get appropriate interest rates?

After removing Rajan what kind of voodoo economics they will follow to keep lending rates low, keep growth high, keep inflation down, and incentivise savers to save more…

That point in the campaign I lost interest and never bothered to get into any debate. It seemed meaningless, and I have nothing to gain or lose in this. After all my daily bread is not going to come from whoever is the next RBI governor.

Later a week or so ago, I woke up when I saw tweet, R3 has planted time bomb which will explode soon after he goes in September. I consider myself to be someone who at least keeps a cursory interest in foreign exchange and NRI deposits. I have been around in business when the Resurgent India Bonds, Millennium India Bonds were raised and had seen issues of exchange rate fluctuation and worries at the time of redemption.

So, went back to check what happened in 2013, and what the time bomb was about. The time bomb scare comes much after RBI had issued advisories about the $24  plus billion FCNR (B) deposits that were raised in 2013 at the height of rupee crash. How silly it is to pick up RBI’s own advisory, twist it and report it as if Rajan raised the billions to drown this country in external debt. At $350 billion plus foreign exchange reserves and one of the lowest current account deficits, who would think RBI cannot manage a $24 billion dollar pay out?

This also didn’t work and so came the next round of slandering. Rajan indulged in money laundering and corruption in dishing out small bank licenses.

Stop, this is serious – so far no RBI governor ever has been accused of any crime, and definitely nothing as serious as money laundering.

Finally on Saturday after Rajan said he is going back, Swamy tweeted that one shouldn’t grudge Rajan a decent exit. Sorry, when did we become a katta panchayat to decide who should  be punished and who should get a decent exit because he has vacated the seat for someone I may like.

This is not a mere slander on Rajan – it is a final nail on the RBI as an institution that has been systematically demolished by several finance ministers in succession who wanted to make it another department of the North Block. 

So, if you send out a message that it is ok to have a money launderer as a head?

No action against someone who laundered money?

I had watched with astonishment how the narrative went after the announcement came on Saturday. One camp celebrating it as if some nincompoop has been shown the door, or India has been delivered into days of low rates and high growth.

Another camp is going around mourning as if India is doomed without Rajan.

No man or woman is indispensable to any institution, has been proved.

 But, the way in which the campaign against Rajan was allowed to run and brought to an ugly chorus reflects on how the governments handle merit and administration. Why should anyone of merit accept any posts now? Which Swamy will come from where to do a hit and run job who knows?

Swamy says he is all praise for Narendra Modi for not yielding to pressure from industrialists, lobbyists in giving an extension to Rajan. I do not know which industrialist (especially some high NPA types) lobbied for Rajan’s extension?

Who are the industrialists who benefit from another round of debt restructuring after Rajan’s exit might help uncover the truth about who lobbied for Rajan’s extension and who lobbied for his exit.

Today, it is impossible to bring down the NPA’s without the kind of debt restructuring which gave an honourable option to several industrialists no to default last time. Those who are chasing Mallya and hounding him cannot argue for the kind of exit option for other industrialists. Those who want to hide the list of largest borrowers who are sitting on stressed assets and trapped for liquidity but hound a convenient Mallya are simply dishonest.

Subject of NPAs needs another long post as it is a different are in itself to be dealt with serious without getting into hyperbole. 

Disclaimer: Not an interested party, not supporting or opposing any individual.