Saturday, October 31, 2015

RBI Chief Rajan "Calls for Tolerance"

Reserve Bank of India governor Raghuram Rajan is being quoted through his comments to the media as "calling for tolerance":

It seems to me that Rajan was specifically appointed to manage monetary policy for the country, and was not appointed to make politically partisan statements, especially when certain political parties are trying to market themselves as epitomizing "tolerance" while opportunistically branding other parties as epitomizing "intolerance". A politically partisan RBI governor has no place holding that office, and needs to be replaced if he continues to echo partisan political rhetoric.

What if US Federal Reserve Chief Janet Yellen started deliberately weighing in on the police shooting of Michael Brown in Ferguson, Missouri, or on a Second Amendment issue like Gun Control? Given the politically partisan nature of certain debates, I think it's very dangerous for an unelected civil servant like a reserve bank chief to be casually dabbling in certain issues which are of a highly charged politically partisan nature. It shows a certain level of irresponsibility and unprofessionalism when appointed officials go beyond their brief to pitch their opinions on politically charged topics to the press. A reserve bank chief's statements are always heavily followed by the press - that's the nature of that job - to the point where analysts will literally try to parse meaning out of every word and utterance. A reserve bank chief is appointed to manage monetary policy, and not to opportunistically use their appointed position as a podium or platform for their own personal views on other policies which are beyond the jurisdiction or scope of their appointment.

It may be recalled that there was the case of a US army general in Afghanistan who publicly questioned President Obama's wisdom on a certain policy, and he was immediately called in by Secretary of Defense Robert Gates, who appropriately told him to tender his resignation. Whether it's a general appointed to manage a war, or a reserve bank chief appointed to manage a monetary situation, the appointee needs to respect the chain of command and the fact that he is not an elected public representative, unlike those who appointed him. When appointees begin making politically partisan comments, they should be reminded that they were not appointed to exercise their own personal freedom of speech - if they want to exercise their personal freedom of speech, then they can step down from their position and do this outside of public office, on their own time.

We already have a rogue judiciary showing open contempt for parliament. We don't need an unelected appointee to a non-constitutional post like an RBI chief giving lecturing sermons on politically partisan issues. Furthermore, we have a key election going on in Bihar right now, that could be pivotal in influencing the course of the country's policy for the near to medium term. Should Raghuram Rajan really be looking to make statements which could be used to influence the outcome of that election? Is that really appropriate for a person in his role position? Even if the Modi govt doesn't take him to task for his statements - just as it hasn't taken the Supreme Court to task for its recent decision against the amendment passed by parliament - then at least the BJP's various allies in the media must be vocal in taking Rajan to task for his conspicuously-timed remarks, and in demanding clarification from him.

Where was Raghuram Rajan in 1984, when the Left-wing Congress partymen led pogroms that saw over 10,000 Sikhs massacred across India (3000 in Delhi alone)? Where were the press conferences and award-returners, and the Moody's analysts then? It's only when the 70-year-old entrenched Congress kleptocracy starts screaming "fascism" that all the Quixotes suddenly come running to aim their lances at the "Hindoo fascists".


non-carborundum said...

Either he is compromised or it is an instance of useful idiocy from an otherwise brilliant individual. Narayana Murthy has been at it too.

This is grounds for dismissal but removing Rajan is politically untenable.

I wonder more generally, do any of these technocrats have any sense of patriotism or are they just there to further their interests and appear cool?

san said...

Yes, removing Rajan would be a bad signal to the markets, given his otherwise fairly competent reputation. Although as I've noted on this blog before, his reaction to the drop in oil prices was slow - China reacted by dropping interest rates right away, given the obvious deflationary effects that an oil price plunge would have. We could have had an extra few months of rate-reduction stimulus if he'd acted sooner like China and others did.

Anyway, it's possible that Rajan only made his comments innocently and unintentionally, and that it's merely the predatory Left-aligned media who have sought to create a mountain out of a molehill by pouncing on Rajan's statements to spin them into an imagined endorsement of recent actions by other haughty left-wing "intellectuals". In any case, I feel that it's incumbent upon Rajan to reduce the furor by clarifying his statements and their intent. He did mention Political Correctness as a stifler of thought, and PC-ness is something that's usually the handiwork of the Left. But he'd better come out and do some damage control, especially since there's a key election in Bihar right now, due to which some political parties are now effectively claiming Rajan's blessings.

non-carborundum said...

I am getting jittery about this entire clique that Modi has brigaded - people like Jayant Sinha, Arvind Panagariya, Arvind Subramaniam. They're all part of the global elite and know where their bread is buttered.

Not sure who is handling PR but they're well behind the curve. Will Modi and team survive this co-ordinated series of attacks?

san said...

Well, my frank assessment is that monetary policy needs to biased towards stimulus, by setting interest rates as low as our poll-sensitive politicians will allow. We shouldn't rely on highly-trained Rajans to be the gatekeepers for doing this.
Why? We already have a politician class who are acutely sensitive to public opinion polls and who will themselves automatically quickly react if the aam aadmi common man starts complaining of inflation pain. If ordinary aam aadmi common man starts complaining that inflation is hurting him, our self-preserving politicians will rush past everyone else in catering to those complaints, because our self-preserving politicians are well aware of how deadly the pain of inflation can be to their party's continuation in power. No reserve bank chief or other inflationary watchdog can ever be as motivated and as anxious as our own politicians to combat inflation. Normally that political jitteriness can be a liability to stable monetary policy, but in the case of BJP, we fortunately have a political leadership that's very interested in monetary stimulus policies in spite of their inflation risk - Jaitley was himself on record as urging RBI to lower rates ASAP to improve growth. If the politicians, who are actually elected by the people and thus most in touch with their concerns, are seeking lower rates (with any attendant inflation rise) then who are the RBI and Rajan to delay or caution on this? RBI/Rajan can't claim to be more attuned to public interest and sensitivities than those directly elected by the public. The country and its economy would be better off if Rajan simply did a Greenspan, and allowed his political bosses to push the rates down (like Greenspan did for Bush). In the case of India's badly under-served/below-capacity economy, the results would not be bad. Rajan's caution is needlessly lagging events, whereas our political system has naturally/necessarily evolved the fastest-reacting anti-inflation reflexes of all anyway - so what is slowpoke Rajan getting in the way for, when the politicians are pushing for lower rates? An independent RBI is an inferior solution right now - Rajan's "independence" has only given him the freedom to lag and fall behind the times. Rajan is thus the slow man in the loop here - he's unfortunately the limiting constraint on our response time to market changes.

karyakarta92 said...

Serves Modi right for allowing members of the Congress eco-system to continue. Raghuram Rajan is a Chidambaram crony. Is Raghuram Rajan even an Indian citizen?

san said...

Rajan looks to be an outsider whom Chidambaram was able to tap with "motherland" rhetoric in an attempt to save his own neck over the crumbling economy. His prowess is well-regarded, but as an outsider he may not be sufficiently schooled in the art of where/when to steer clear of political pitfalls. Also, "Hindutva agenda" is looked upon with more suspicion in the South, where Rajan hails from.

This is why we also need to get our own camp to rein in its less restrained members, since any reckless act by someone can quickly blow up in all of our faces - especially when we have a desperate wounded Congress tiger prowling around. There are too many big challenges and big battles to be faced, to get distracted by these sideshows. Economic reform by itself is going to require all kinds of heavy lifting, to get the economy taking off. We need that Rajya Sabha to get the economy really moving, beyond its mere tepid 7% (sorry, but we could be doing a lot better, if Congress wasn't blocking everything in the upper house)

san said...

Regarding the PR/media management aspects - it sure would be nice if there was an Indian equivalent of FOX News to air our side of things when needed, especially during these crucial moments where Congress and the Left orchestrate stunts to manufacture outrage, etc. Furthermore, it would be nice to have a staple of non-Left artists who can routinely lampoon and satirize the Left and their henchmen. These khaki-wearing stiffs don't know how to make a viral video, or create a meme, etc. We need our own media content corps, and it needs to go far beyond mere Twitter brigades.