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RBI is now a thriller material. Conspiracy theories can aid juicy scripts

Given that Urjit Patel was under pressure on everything from sharing RBI's reserves with the government to public sector bank reforms, public sympathy aided by media stories is such that the BJP's rating can only suffer a jolt as a result of his exit

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What is the fun in being in the capital of the world's largest democracy amid politically acrimonious times if you do not have some intrigue or conspiracy theory?  I thought of adding to the speculation after hearing a story -- which may or may not be true -- that Reserve Bank of India governor Urjit Patel did not resign of his own accord amid pressures on his office but was told to go. In so many words.

That is counter-intuitive, because you do not expect the government to do something that would rock the markets and bring its credibility down on a day when state assembly results being dubbed as a semi-final to general elections in 2019 show up the ruling BJP in a poor light in crucial Hindi heartland states. But then, Narendra Modi is no ordinary prime minister. Not since Indira Gandhi has India had a PM subject to whispers of various kinds that build an aura of power and shrewdness around him.

Given that Urjit Patel was under pressure on everything from sharing RBI's reserves with the government to public sector bank reforms, public sympathy aided by media stories is such that the BJP's rating can only suffer a jolt as a result of his exit. But look at it this way. By getting rid of a difficult governor and deploying someone more friendly in his place, the NDA/BJP rulers have an extra lever in a crucial institution. If the NDA comes back to power, there would be a friendlier figure  in Mumbai's Ballard Estate and aid a smoother second term. If it does not retain power, there might be a loyalist Trojan Horse of sorts who can do some mischief to return a favour. Any party thinking about a longer term might prefer a tactical short-term image loss in exchange for a future opportunity. Old saying: He who hits and runs away lives to fight another day.

I am tempted to write a thriller around that. Imagine a central bank chief who aids the PM instead of throwing awfully orthodox monetary theories at him.  Imagine a deputy governor who does not like that and takes him on. Imagine a new web series on Netflix or Amazon Prime around their conflict.

Sadly, however, life is not a soap opera and economic policy is less amenable to twists.  But it has become clear that RBI as an institution is more dramatic than it has been imagined to be thus far. 

We have just had Kotak Mahindra going to the high court against RBI's intransigence on its attempt to increase promoter stakes that involves some unconventional financial engineering.  Some public sector banks are holding back loans as the RBI holds their reins through a process called Prompt Corrective Action. 

Now, in such a context, which industrialist in his right mind would want to fund a political party? If the government proposes and the RBI disposes, it makes sense for a lobbyist fixer to tell a party treasurer over a drink in one of South Delhi's better bars: "How do I make sense of your political support if there are fuddy-duddy economists turning down your requests?"

Conspiracy theories can go on and on in Lutyens' Delhi. Right now, after setbacks in state elections, the Congress party is in a good mood but the BJP, may one remind you, is still in power. There is a lot that can be done behind the scenes that may not sound like a breezy Chetan Bhagat novel, but an Anurag Kashyap movie full of intrigue is a different thing. This ain't quite Bollywood, but, as the popular line goes: Picture abhi baaki hai, mere dost.


Please note that this column was written before Shaktikanta Das, who supervised demonetisation, was named to succeed Urjit Patel as the new RBI governor

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Madhavan Narayanan

Senior Journalist and Commentator

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