The Narendra Modi-led NDA government may be taking their own sweet time to decide on whether to retain RBI governor Raghuram Rajan for the second term in September, but the central bank chief continues to get overwhelming support from people across varied sectors and stature.
The latest to join the support bandwagon for the RBI chief is Infosys co-founder NR Narayan Murthy. While in last few months many corporate honchos and several domestic and international brokerages rooted for a second term for Rajan, but the supremo of India's second largest IT firm wants two more terms for the country's current monetary chief.
"India should be very fortunate to have him (Rajan) serve this country for not just one, I would say two more terms," Narayana Murthy said in a interview to the Economic Times.
According to him, Rajan has been instrumental in steering the country's monetary policy, despite facing a barrage of criticism from some elements in the government over last few months. But, Rajan's decision to keep a check on consumer price inflation, which has been in low single-digits for a year now, has won him several accolades from domestic and international investment fraternity in recent past.
Of late, online petitions seeking support of a second term for the former IMF chief economist had garnered close to 60,000 signatures. The petition urged Prime Minister Narendra Modi to allow a second term to Rajan at the RBI.
The governor is highly respected among global investors for his expertise and track record. If he were to leave the Reserve Bank of India, “the immediate impact would include a fall in the Indian stockmarket and a weakening of the currency’’, said Mohamed A. El-Erian, former chief executive of money management giant Pacific Investment Management. “Indeed, I suspect that many share my view that he is one of the very best central bank governors in the world,” said Mr El-Erian, chief economic adviser for financial services firm Allianz.
Nilesh Shah, managing director of domestic mutual fund brokerage firm Kotak Mahindra Asset Management, also said, "Rajan has done a fantastic job so people want that policycontinuation to happen."
Over the past year, Rajan has cut interest rates three times, negotiated a new monetary policy framework with the government and pushed banks to come clean on their nonperforming loans.
A media-based survey done last month also found that 90 percent of CEOs wanted Raghuram Rajan to continue as the governor of Reserve Bank of India.
However, Rajan has been facing a continuous attack from within the ruling government. Among others, Subramanian Swamy, a BJP leader, has criticised RBI chief’s failure to lower interest rates and boost the economy.
Earlier this month, Subramanian Swamy launching another attack on RBI Governor Raghuram Rajan, said he had planted "a time bomb" in the Indian financial system that will explode in December.
Swamy has written twice to Modi calling for sacking of the RBI chief even before his term comes up for renewal in September. Swamy last month said Rajan’s interest rate policy had led to “the collapse of industry and rise of unemployment in the economy”.
On 26 May, Swamy had levelled six allegations against Rajan and asked the Prime Minister to sack him immediately.
He had also claimed that Rajan was "mentally not fully Indian" and alleged that he has "wilfully wrecked the economy".
On Swamy's earlier comment, Rajan had said, "There are certain allegations which are fundamentally wrong and baseless and addressing them would amount to giving them legitimacy."
On his "Indian-ness" being questioned in part because he holds a green card, he said, "Indian-ness, love for your country is complicated. For every person there is a different way that you show respect for your country...my mother-in-law will say karmayogi is the way to go - do your work."
When asked about the extension to Rajan, Modi recently told the Wall Street Journal, “I don’t think this administrative subject should be an issue of interest to the media. Besides, it will come up only in September.”
Denouncing any personal attack on Rajan, Finance Minister Arun Jaitley on his part said in an interview, “I do not approve of any of these comments being made by anyone as far as the personality is concerned, because the RBI and its Governor is an important institution in Indian economy.”
Last week during the monetary policy announcement when analysts and the markets was hoping for some clarity over the wild speculation, Rajan preferred to stay mostly silent on the matter.
“You will know when there’s news,” he said at a press conference after the monetary policy review briefing. “It would be cruel of me to spoil the fun the press is having."
While the decision to retain or give him a golden handshake rests with the government, the robust support coming in from all the corners for the governor before the end of his three year tenure in September puts the onus back on the Narendra Modi government to take a pragmatic decision.