The media went into overdrive when news broke that Dr Raghuram Rajan, Governor of the Reserve Bank of India (RBI) announced that he would not be seeking term after his present ended on September 4. He said he would return to the bowers of academe in Chicago, where had earned a global reputation as a banker and financial expert. He wished to rejoin the world of ideas where he was most comfortable. Dr Rajan shot to fame when he predicted the Wall Street crash and international economic crisis that followed several years before they occurred.
The Telegraph (June 19) carried an outsize, screaming front-page headline, more proclamation than headline, ‘WRECKS IT’ with an equally eye-catching subtitle EXIt Comes TRUE: Rajan hounded out’. There was little sign that he was hounded out in Dr Rajan’s public statement that he was quitting his job. It read: While I was open to seeing these developments (creation of a committee to set interest rates and the clean-up of banks) through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on 4 September, 2016. I will, of course, always be available to serve my country when needed.’
It appears to have been an amicable parting of ways rather than the suggested witch hunt. BJP MP, Subramanian Swamy, who had sought to torment Dr Rajan with accusations that high interest rates had taken India into recession, that he held an American Green card, and much else that bore the Swamy trademark: irresponsibility and hyperbole. When was India in recession, pray? And did a Green card signal intent. Among the leading lights of the Indian diaspora, whom Prime Minister seeks to woo for his ambitious ‘Make in India’ project, are in possession of a Green card.
Swamy overcooked his bile by setting his sights on Arvind Subramanian, the government’s Economic Adviser, with a swinging broadside against him. This time Finance Minister Arun Jaitley riposted with an equally ferocious rebuttal in defence of Subramanian. The BJP spokesman maintained that Swamy’s views were personal and had no bearing on the party. It was a grave error of judgment by the BJP to have given him a seat in the Rajya Sabha. Long in the tooth as an irresponsible attention seeker, Swamy is unfit to hold any responsible office (Times of India, Hindu, Telegraph June 23)
Captains of industry
Captains of industry, in TV interviews, expressed dismay at the news of Dr Rajan’s departure. They were agreed that he had stabilized the economy, reduced inflation through much needed fiscal discipline and cleaned up the banks. According to Kiran Mazumdar Shaw, CEO and Managing Director of pharmaceutical company, Biocon, Dr Rajan had created a momentum which would take India forward if his basic measures remained unchanged.
The BJP spokesman, also on television, in a panel discussion, agreed that Dr Rajan had rendered sterling service to the country through his outstanding intellect and understanding of finance, that there was no question of his being forced out. But most of the panelists had a field day with conspiracy theories and dire predictions of the looming doomsday including chaos on the stockmarket.
Radical FDI reform
The country waited bated breath for the predicted financial slide. Instead, awoke to news of a radical reform of Foreign Direct Investment (FDI) laws. M The vast majority of pundits were wrong footed and reacted sheepishly. The Telegraph (June 21) in a banner front-page headline appeared to suggest, somewhat forlornly, that the measure was a ‘headline-grabber’ designed to douse the flames of the Rajan affair. A far-reaching reform such as this forethought and reflection, hence was planned with care.
FDI norms have been eased across sectors. Airlines: From 49 per cent to 100 per cent; Food retail: From zero to 100 per cent; Single brand for cutting edge products: Benefits Apple; Defence: Previous 49 per cent could be increased to 100 only if technology state-of-the-art; now requirement is simply ‘modern’ to allow greater flexibility; Brownfield airports: From 74 per cent to 100 per cent.
These are the most significant sectors that will see a new ball game. The government didn’t want the or the nation to believe Raghuram Rajan’s exit (RRexit) would lead to a change in the reform agenda (Times of India, Hindu, Telegraph, Business Line, Mint June 21)
India 10th in FDI inflows
According to a World Investment report, India continues to be among the top ten countries globally for direct foreign investment (FDI) inflows. It ranks fourth in Asia. India’s FDI inflows have increased from $35 billion to $44 billion from 2014 to the first four months of 2016. This has been due largely to the ‘Make in India’ initiative, alongside the liberalization measures undertaken by the government.(Mint June 22)
Kudankulam scientist honored by Russia
Russia has awarded the ‘Order of Friendship’ to R S Sundar for his role in the operations of the Kudankulam nuclear power facility in Tamil Nadu. The award was presented to him by Russian Ambassador to India Alexander Kadakin at a ceremony in the Russian Embassy in New Delhi.
Speaking to the media after the award, an elated Sundar said: ‘It was really a great honor. It was entirely a team effort. Though I’m receiving the honor as a representative, it was largely this teamwork of all our employees. Credit is due to both the Indian side and the Russian side. It would not have been possible to implement such a huge project except for vthe cooperation extended by everybody.’ Unit 2 of the facility will ready for operation shortly.ussia India Report Moscow June 14) Rosneft, the Russian energy giant, is set to expand its footprint in India with plans to buy a stake in Essar’s Oil’s Vadinar refinery in Gujarat and seek new outlets for its crude. ‘’We do believe in the upside potential of the Indian market,’ said Rosneft Vice President Pavel Federov. The company says it hopes to acquire as much as 49 per cent of the 405,000-barrel-a-day by the end of June. The deal comes with a 10 year contract to sell 100 million tonnes of crude in the Indian market, marking a significant expansion in a market where Russia has hitherto had a minor presence. (Mint June 16)
Ignored but not forgotten
P,V.Narasimha Rao became India’s eighth prime minister 25 years ago following the tragic assassination of Rajiv Gandhi. His predecessors V P Singh and Chandrsekher had presided over a mess, politically and economically. The country was bankrupt and its gold reserves had to be delivered by hand in London before a loan could be negotiated. It took a wise head and a firm pair of hands to bring the ship of state tyo an even keel. Manmohan Singh, a previous Governor of the Reserve Bank of India was brought into the government and empowered to initiated fundamental economic reforms and put in on a higher growth trajectory never seen before.
Kashmir, Punjab insurgencies
In Kashmir jihadis had commenced a full blown insurgency ethnically cleansed the valley of its Hindu Pandit population. In Punjab, the Khalistani insurgents held sway, while from Pakistan, rogue nuclear bomb maker, Abdul Qadir Khan had announce to an Indian journalist that his country was in possession of such a weapon and was prepared to use it against India.
Kashmir and Punjab were sorted, and India prepared to test its own nuclear bomb, but after Narasimha’s exit the test were conducted by the BJP dispensation led by Atal Bihari Vajpayee. Narasimha Rao, scholar, linguist and silent administrator led India out of real jam. His Congress party cold shouldered him and he retired to his home State Andhra Pradesh. Today, years after his death, he is widely acclaimed as a great Prime Minister.
Labour reforms via textile package
The Cabinet has packaged forward labour reforms with its approval for Rs 60,000 crore deal in support of the textile and apparel industries A key element of this arrangement is that overtime for the workforce should not exceed 8 hours per week., which translates into an approximate 90 hours over three months. The current norm allows 50 hours overtime in three months. ‘It will be advantageous for industry as well as labour,’ said A. Sakthival, a representative of industry lobby groups. The aim is to give India pole position in this sector rivals Bangladesh and Vietnam (Times of India, Business Line June 23)
Mega auction for telecom spectrum
Mobile users can hope to get better quality services and access to high speed data, with Cabinet approval of the biggest ever spectrum auction. The auction is expected to generate over Rs 500,000 crore for the central government, and simultaneously allow operators to accumulate more spectrum, a factor in their plans to offer more bandwith-guzzling services, such as video-on-demand and live television. The auction is scheduled to start in September (NBusiness Line, Times of India June 23).
PM Modi denounces unfair criticism of Raghuram Rajan
Attempts to question outgoing RBI governor Raghuram Rajan’s competence is “unjust” according to PM Modi. Mr Rajan who has decided not to renew a second term as the Reserve Bank governor faced calls by BJP Leader Subramanian Swamy and senior bureaucrats saying he was “mentally not fully Indian”.
The Prime Minister said “Those who are creating controversies are being unjust to Raghuram Rajan, I believe Rajan’s patriotism os no less than any of ours”. Speaking directly about the accusations the PM Modi said “ Whether it is someone from my party or not , I believe such things are inappropriate. The nation won’t benefit from such publicity stunts.” The Prime Minister made the comments during an interview with Arnab Goswami of Times Now.