Double standards

I had to write this as a follow up to the Slander post that I wrote in June. Sunday, September 4th Raghuram Rajan will leave Reserve Bank of India, handing over the reins to Urjit Patel. By now many questions would have been raised on the choice of Patel, markets reacted, and Prime Minister’s detractors taking their usual potshots at the Ambani connection.

But, in all this the man who went against Rajan, first mainly on him being not fully Indian has endorsed Patel. Subramaniam Swamy has no problems with the fact that Patel didn’t “officially” become a citizen till 2013 when he had to assume office as deputy governor of RBI. The charge against Rajan was he held on to his green card, that was akin to being a US citizen for Swamy. But, Patel having worked with the government in various capacities since 1998 opted for Indian citizenship only in 2013 is immaterial.

Patel was also educated in institutions abroad, from London School of Economics to Oxford and Yale. Doesn’t matter Swamy must be contended that he is an economist.

Like Rajan, Patel was also employed at IMF, but he isn’t US plant like Rajan, Swamy must be having some great insider insights on who plants whom.

Both Rajan and Patel are considered inflation hawks, Patel has his stamp on inflation targeting with the new roadmap he drew for monetary policy framework. Don’t worry, with the background Patel has has had having worked in the private sector, he may after all cut interest rates by a percentage or two, is that what Swamy may be assuming in not targeting him. Rajan was a headache for all those borrowers who had over extended their leverage and hoarded loans.

It is not that every day you would get a RBI governor who had worked with Reliance Industries. For Swamy it may not be a big deal. Why should he be shouting Ambani, Adani, we have an Arvind Kejriwal for that. The crusader for truth that he is, why didn’t he question finance ministry for not mentioning Patel’s Reliance connection and non-executive directorship at the scam tainted commodities exchange MCX in their appointments release. That was only a non-executive directorship you see, and MCX fully Indian. Find out who lost out on the race to SEBI chairman post due to MCX connection.

Patel moved from Boston Consulting to RBI during UPA regime, it is fine there are many UPA appointees NDA has retained, but Rajan was a Chidambaram appointee, the emphasis wouldn’t apply to Patel.

This is neither a support for Rajan nor a critique of Patel, but a dirty campaign stands exposed and that is why the need to put the two on balance to show their backgrounds and ask why when one came under question the other hasn’t. Probably we would know the answer if Patel continues to follow in Rajan’s footsteps and makes it tough for defaulting borrowers to make peace with their banks.

Some have expressed relief that unlike Rajan, Patel would speak only on monetary policy and nothing else. That is fine, Rajan perished by his talk and his looks, and Patel might be saved for he doesn’t talk. He doesn’t talk, and to such an extent when journalists poured over RBI website for Patel’s speeches as central banker, the search threw up just one speech. Newspaper reports said in his 43-month stint at RBI had given just one interview and two speeches.

Going back to his past speeches, before he joined RBI, it is clear he is a fiscal policy hawk as well, and didn’t mince words on India’s fiscal deficit conundrum – in a paper he co-wrote in 2006.

“Fiscal virtue cannot be legislated. It must be implemented and enforced—it must be incentive-compatible even for myopic and opportunistic governments. Unless India discovers a way of tying its fiscal Ulysses to the mast, the siren song of fiscal retrenchment tomorrow but fiscal expansion today will continue to lead policymakers astray.”

So, we don’t know if it is going to be an easy, communicative relationship between RBI and the government – the only hope seems to be the Gujarati connection between the Prime Minister and Patel.

However, no one knows Patel’s mind. Apparently, he doesn’t talk to anyone, not even to his colleagues, forget bankers and others in the financial world, who read every word governors utter.

Probably, the only aspect in which Patel differs from Rajan, from whatever we know through records and sources.

One is just waiting to see how long Patel continues to be in the good books of Swamy. But, no one wishes Patel the kind of dirty and personal campaign Rajan was subjected to during his tenure, and even in exit.