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Rexit Won't Have Any Adverse Impact as RBI Will Always Draw Big Talent For Governor’s Post

Ironically, critics of the incumbent government have been focusing on the academic credentials and track record of Raghuram Rajan at the IMF and applauding him as a skillful economic thinker rather than speaking about his performance as the chief of the central bank

Photo Credit : Reuters


While the world discusses the burning topic of Brexit (British exit from EU), we have back home in India our own issue of Rexit (Raghuram Rajan’s exit from Reserve Bank of India), which the Indian mainstream media (MSM) is striving to hype up to be of equal importance and implications, if not more. With RBI Governor Rajan's announcement that he would be returning to the academia at the end of his tenure in September, and Finance Minister Arun Jaitley's statement that the Union government respects the former's decision, the nation's focus has shifted from Rajan to his successor in the country's apex bank. Having decided on the course of action on one of the most contentious issues that the nation has had to address for some time now, the Union government has to follow up with the more important issue of selecting Rajan's successor.

Meanwhile, there has been lots of cynicism amongst the political and academic circles about there being no potential candidate in sight, matching the outstanding and impressive academic credentials of Rajan. This had in the first place emboldened him to stray out of the ambit of his profession and make controversial statements on prickly topics like "tolerance". It is indeed ironical that the critics of the government have been focusing on the academic credentials and track record of Rajan at the International Monetary Fund (IMF) and applauding him as a skillful economic thinker rather than speaking about his performance as the Governor of the Reserve Bank.

Grave Doubts
However, it is grudgingly conceded by many of the government critics that there should be no dearth of prospective candidates in the country with academic qualifications and professional competence equal to Rajan's. The moot question among the government's detractors is how independent-minded and bold the new RBI governor will be in his handling of matters of fiscal discipline without having to go against the grain of the monetary policy of the government of the day. The general consensus among these harsh critics seems to be that the successor would, in all probability, be a quintessential bureaucrat, who is shy of being innovative and experimental, tending to toe the government's line. In short, someone who would make Rajan look in retrospect like a revolutionary of sorts, if not a runaway renegade!

Adroit Handling By Government

Meanwhile, the Union government has, on its part, been playing the cards close to its chest. It seems to be in no mood to do kite-flying or sending out feelers to assess possible reaction to the selection of any particular candidate. Hence, the MSM has been rife with its own shortlist of potential candidates. Lately, some media reports said the government has narrowed the list of top contenders for the governor’s post to four. They are current RBI Deputy Governor Urjit Patel, former Deputy Governors Rakesh Mohan and Subir Gokarn, as well as State Bank of India Chairperson Arundhati Bhattacharya. Earlier, the MSM had even speculated that Arvind Subramanian, Chief Economic Advisor to the Government, was leading the pack closely followed by Shaktikanta Das, Secretary, Economic Affairs. The others who were believed to be in the race included Economist and Academic Vijay Kelkar, Bandhan Bank Chairman Ashok Lahiri and National Stock Exchange Chairman Ashok Chawla. If latest media reports are anything to go by, then the shortlist of four candidates has now been truncated further down to two – Subir Gokran and Rakesh Mohan.

The MSM pushed out Arvind Subramanian and Shaktikanta Das out of its list of probables soon after BJP MP Dr Subramanian Swamy fired salvos against them alleging anti-national activities and impropriety in their professional capacity. Though it is believed that the Union government is keen on the selection of Rajan's successor as soon as possible, no official list of prospective candidates has been made available by the government nor has a selection panel been appointed for the purpose. However, a recent Dow Jones report said the government may announce the name of Rajan’s successor by July 15. Though it is evident that the decision will be that of the Prime Minister, to be aided by the Finance Minister, Dr Swamy’s move to target two prospective candidates had somewhat queered the pitch of the selection process over which the Congress Party lost no time to go to town and denigrate the government!.

Pessimism And Cynicism Unjustified
Be that as it may, leaving aside the political aspect of the matter for the nonce, why would one be assailed by pessimism and cynicism about the availability of a pool of talent for the top banker's job that is due to fall vacant only in September following Rexit? It is unthinkable to believe the harsh criticism that India has a shallow talent pool or has failed to build leadership bench strength causing a void of diversity, experience, and expertise among prospective leaders to sidle up effortlessly and with ease to the top job. There could be no two opinions about the plentiful availability of talent or skills for any top-level position, specialized in nature or otherwise, in a country of the size and rich demographic divergence as India.

However, uncharitable critics would have you believe that the reality on the ground is at variance with the ideal scenario. They go on to attribute several reasons for the purported shortage of a talent pool, such as flagrant politicization of administration, "peevishness" on the part of the political dispensation that forestalls a congenial atmosphere for the person at the helm of affairs of the establishment to be free-thinking, innovative and bold in his sphere of operation, a deep-rooted evil of corruption, the vexatious system of reservations, etc.

The long and short of the argument is that the lack of freedom to think, speak and act without the fear of his political master who is a Johnny-come-lately, dissuades the administrative head of the establishment to realize his full potential or give an optimum level of performance despite firing on all cylinders. This, however, is a systemic error or flaw, which has nothing to do with the government of the day. The deeply ingrained fault lines would have to be smoothened, ironed out and eliminated systematically and painstakingly over a period of time in a democratic setup like ours. There is no question of rushing about or the making of the administrative machinery fully autonomous, free from interference by restive political bosses. Haste in the approach is likely to not only make matters more complicated and confounded but could be counterproductive and render it an unintended exercise, resulting in the irretrievable subversion of well-established democratic norms and processes of the country.

Inner Party Democracy
Having dealt, at some length, the question of the purported "subservience" of the administrator to the foibles and frailty of the political undercurrent of the system, the question of availability of a suitable replacement for Rajan remains. It is noteworthy that notwithstanding the adverse comments of Dr Subramanian Swamy and some other BJP leaders, Rajan enjoyed the openly-stated support of the Union Finance Minister and drew no negative comment or criticism from the Prime Minister. This speaks of the strength of our system and inner party democracy of the BJP, which is often criticized by its political rivals as rigid in its policies and approach. The degree of freedom of expression of a party MP and the adroit way his criticism was fielded by the government speak volumes of the tolerance and the tacit understanding between the party and the sword arm of the government to agree to disagree on matters of conflicting positions. A far cry from the accusation of being a rigid party of old guards of procrustean values! In fact, the Rajan episode has served an unintended purpose of depicting the BJP in vibrant colours of a thriving and flourishing democracy.

Rajan's Call
Coming to the brass tacks of the issue, Rajan was neither denied a second term of office nor eased out by the Central government. The decision to call it a day was solely that of Rajan and he admirably steered clear of a controversy that the Congress Party and the Media tried their best to blow out of proportion. He rather stated explicitly in his farewell letter to his team in RBI that his leave at the University in Chicago where he had been teaching was coming to a close and that he had no intention to go for a second term of office. Whereas he might have continued, in all probability, had a second term been offered to him by the government, in line with his earlier-stated wish to pursue and complete his unfinished work, the government's stoic silence over the matter in exercise of its prerogative to do so, enabled him to make up his own mind about his wish to return to teaching, which is his first love. In short, the Union government's stance neatly dovetailed with his long-term plans for his future career.

The government of the day could not be charged with the breaking of any tradition or convention in the matter, let alone a Constitutional requirement or procedure, by not granting the second term of office as a matter of routine. From no angle, nor in any respect, was Rexit the direct or indirect outcome of the government's efforts. The Union government just kept the door open for Rajan to decide and the latter chose to exit.

Hassle-free Governance
The Central government has to move on with a new appointee from the available pool of talent. It is well on the job without displaying any sign of bitterness or nervousness over the issue of Rexit, which is now behind us. How best the new Governor will take the job in his stride, by picking up the threads from his predecessor's legacy and available resources, improve upon the system with his innovations and style of operation and push the nation's economy upwards without making a compromise with the government's economic and monetary policies, is a matter that will pan out in the course of time.

After all, the people of the country voted for the Narendra Modi government to function freely and not for constricting his style of governance with the appointment of a certain breed or class of top-level officials in key posts. Should it have been the other way round, where would the much-hyped and touted freedom of expression, flexibility and maneuverability of performance within the existing set of norms and parameters be in the case of Modi and his team saddled by an overwhelming popular mandate, to not only provide good governance but carry the nation to greater heights of glory? Let us not forget about the need for the overall big picture of clarity and excellence, preoccupied and rather obsessed as we are over the much smaller and yet significant issue of Rexit.

Churning For Talent
In the prevailing circumstances, what the nation is calling for is a countrywide churning of talent, which would likely throw up the right answer to the question – Who or what after Rexit? How the exercise is to be accomplished is not a task for the political dispensation alone, which is undoubtedly the principal participant in the exercise, but also for the circles of academics and intellectuals. They are definitely capable of making the right inputs for the selection process, which should ideally be on the basis of outstanding qualifications, experience, expertise and track record and last, but not the least, the right orientation to enhance the country in alignment with the government's avowed economic and monetary policies along the lines of nationalism. These are issues on which the government cannot afford to make compromises as it would not only militate against its poll promises but also negate its raison d'être.

The idea is not to prove the uncharitable critics wrong and score political brownie points but to show to ourselves and the world that India is not talent-strapped but is quite rich in managerial and administrative skills for enhancing the strengths of the economic powerhouse that it is, and they are capable of ushering the country into an era of excellence and economic exuberance.

In the past, every time a tall political leader of our country has fallen to an assassin's bullet or otherwise disappeared from the scene of governance, the nation has risen as one man and wowed the world with an impressive display of its commitment to the democratic spirit and system of governance by electing the right person to fill in the shoes of the leader gone by. In contrast, what we now have at hand is a routine administrative matter of change of guard albeit at the top level at the country’s apex bank. Without meaning to belittle the significance of the issue, it is important that the nation does not allow itself to be overawed by the sheer size of the task. Talking about the size, we have to remind ourselves that it is not the size of the participant in the fight but the fight in the participant that matters! We have done it before. We can do it now. Hence, Rexit does not matter at all. What really matters is identifying the right person from the talent that is already available in plenty. So, let us now get on with the task at hand.

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.

Dr Sunil Gupta

Dr Sunil Gupta is a chartered accountant by profession. He has served as a director on the boards of Punjab National Bank (PNB) and Rural Electrification Corporation Limited (REC), General Insurance Corporation of India (GIC) and Dena Bank. Appreciated by national leaders and business professionals, Dr Gupta believes in all-inclusive participation and growth

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