by admin | May 25, 2021 | Economy, News, Politics
Raghuram Rajan
New Delhi : Populist nationalism is potentially quite damaging to economic growth, and which is often articulated as the majority community’s feelings of aggravation at being discriminated against, former RBI Governor Raghuram Rajan said on Sunday.
In a conversation, the recording of which was shown at the Times Litfest event here, he said that populist nationalism is ascedent all over the world and India is not immune to it.
“Populist nationalism is damaging to economic growth… it has to set back the economy because it is divisive. It feeds off the sensation of the majority community feeling it is being discriminated against,” Rajan, who is not known to speak often on politics, said in response to a query on the issue.
“It exists all over the world and also in India, while people exploit this sense of grievance,” he said, noting that the issue of reservations in the country is an instance of the phenomenon.
“It is important to tackle the underlying economic problem (jobs). One cannot overstate the grievance of the majority community because minorities have also faced discrimination historically,” Rajan said.
He described populist nationalism as “inward looking”, while policies it advocates “often come in the way of growth.”
“Nationalism is not patriotic because it is divisive and can even be quite dangerous. However, it is wrong to dismiss people who are voicing these things..dismissing them as rustic.
“These protests have a sense of identity that is being eroded…that cry also has to be heard,” he added.
The ex-governor of the central bank said in the ultimate analysis, democracy is India’s strength.
“There may by push and pulls in the working of democracy, but in the long-term it is beneficial. It is egalitarian, takes people along together, a superior mechanism to identify the flaws in the market system and for the system to react,” he said.
About “illiberal democracy”, Rajan, who is currently professor in the University of Chicago, said that it was “a function of the system, which kowtows to the strong leader.”
“Business leaders, apart from some exceptions, tend to bow to the political leader. Iliberal democracy is crony capitalism also because the interests of business and political leaders coincide,” he said.
“Limited access societies have captured the pathways to wealth,” he said while describing “crony capitalism.”
There exists a “cosy relationship” between the corporate and the political leadership in which the mass media, mostly owned by corporates, is implicated, Rajan added.
—IANS
by admin | May 25, 2021 | Opinions
By Rohit Vaid, Mumbai, (IANS) The likely exit of Britain from the European Union (EU) and Reserve Bank of India (RBI) Governor Raghuram Rajan’s decision not to seek a second term might flare up volatility in the Indian equity markets in the upcoming week.
Investors will also be concerned over an initial deficit in monsoon rains, fluctuations in rupee value and food prices.
According to market observers, come Monday, June 20, a dour mood is expected to engulf investors, after Rajan said in a letter to his colleagues that he was not seeking a second term and will return to academia when his tenure ends in September.
After Rajan’s letter, Finance Minister Arun Jaitley said a successor would be named soon.
“The RBI Governor’s exit news could prompt investors to recheck their bullish convictions,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.
But the biggest risk to the key equity indices stems from the possible exit of Britain from the EU. The decision on the issue is subject to a referendum which will be conducted on June 23.
There might be far-reaching effects on global stock markets, as well as the international currencies, if Britain decides to exit the EU.
Besides, domestic investors will be concerned about the direct negative impact that some of the India-based companies and sectors that have investments and exposure to Britain will suffer.
The possible British exit will also lead to greater investments into less risky assets like gold and increase the overall outflows from the domestic equity markets.
“It is expected that the market would remain a little volatile due to the global events. Brexit is expected to heighten global volatility, thereby impacting capital flows at home,” D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.
According to Vaibhav Agrawal, Vice President and Research Head at Angel Broking, the possibility that Britain will vote to leave the EU has already rattled the global markets.
“US stock markets could see increased volatility as investors position for next week’s referendum,” Agrawal pointed out.
Other key global data points such as US homes sales, US crude oil inventory and employment data are expected to impact the general sentiments.
In addition, the US Federal Reserve Chairwoman Janet Yellen’s testimony to the US Congress might give further cues towards the next phase of the key lending rate hikes.
“The testimony can provide some insights into — when the next rate hike decision can come, as there are just three more monetary policy reviews left in the US,” explained James.
“A further extension to the US Fed rate hike will provide relief to the emerging markets (EM) like India.”
In its two-day policy meet last week, the US FOMC (Federal Open Market Committee) decided to maintain its key lending rates. The US Fed signalled its intention to limit the times it might increase key lending rates due to weak domestic jobs market.
A hike in the US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
Devendra Nevgi, Chief Executive of ZyFin Advisors, expects domestic developments to drive the markets after the global economic events conclude.
“The global risk appetite would drive the market sentiments. After the outcome, the markets will continue to focus on the domestic developments,” Nevgi said.
On the domestic front, strong economic fundamentals and recent economic announcements on major economic policy initiatives and debt recast plans are expected to attract investors.
“The factors such as prospects of better economic growth, expectations of a normal monsoon, double-digit earnings growth by the end of FY17 would continue to attract the foreign participants,” Aggarwal said.
“Besides these, the likely passage of the GST (Goods and Services Tax) Bill will continue to boost the confidence of the market participants.”
However, an initial deficit in monsoon rains will be closely followed by investors.
“Apart from the Brexit turmoil, the monsoon rainfall and passage of GST are the key triggers for the Indian markets,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
Investors were seen cautious last week after reports emerged that monsoon rains so far have been below average by around 25 per cent.
A weak monsoon, coupled with recent uptrend in macro-economic inflation data points could lead to a build-up in price pressure and reduce chances of a future rate cut.
(Rohit Vaid can be cntacted at rohit.v@ians.in)
by admin | May 25, 2021 | Banking, News
Mumbai, (IANS) Ending months of suspense, Reserve Bank of India (RBI) Governor Raghuram Govind Rajan formally told his colleagues on Saturday that he is not keen on a second term at the helm of the country’s central bank and will return to academia when his tenure ends in September.
Soon after, Finance Minister Arun Jaitley, while appreciating Rajan’s role, said a successor will be named soon.
Rajan’s decision was conveyed in an 888-word letter by him to the RBI staff, a copy of which was obtained by IANS — one in which he has listed what the central bank has managed to achieve in the past three years and what remains to be done, although that process has also been initiated.
Reflecting on his term as the 23rd governor of the central bank since September 2013 — which has seen praise and also a fair share of criticism — Rajan said the agenda pursued by his team was to help nurse India back on the path of recovery first, and then growth, and keep prices in check.
He went on to allude that much was accomplished, even as a part of that onerous task remained a work in progress — while also indicating that he was ready to see that through as well, but eventually decided against it.
“While I was open to seeing these developments 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 September 4, 2016,” he said.
“I will, of course, always be available to serve my country when needed,” he added.
“I am an academic and I have always made it clear that my ultimate home is in the realm of ideas. The approaching end of my three year term, and of my leave at the University of Chicago, was therefore a good time to reflect on how much we had accomplished.”
Stating that he will be returning to the US university, from where he is on a sabbatical, Rajan listed his unfinished agenda as seeing a monetary policy panel in place to broadly guide the central bank, and a clean-up of banks’ balance sheets.
Listing the achievements, since the time India’s growth was high and inflation also high when he took over, the governor said price control, improving foreign exchange reserves, currency stability, an eventual lowering of interest rates and extending a helping hand for reforms stood out.
He hoped the unfinished agenda for which the path had been paved will be pursued by his successor — the 24th governor of the Reserve Bank — again a matter of much debate and interest, with some names already doing the rounds.
Much speculation had gone into a possible second term for Rajan, hailed by many as the best governor the central bank could have possibly had on its board during the difficult times India was going through, but also with some share of critics.
In fact, a petition floated online pushing for a second term for this IIT alumnus, had tens of thousands of netizens rooting for him, even as some critics like BJP leader Subramanian Swamy were particularly harsh towards him, asking Prime Minister Narendra Modi to let him go. Both Modi and Finance Minister Jaitley remained silent all along.
On Saturday, Jaitley said: “The government appreciates good work done by RBI Governor Raghuram Rajan and respects his decision.” He said a successor would announced “soon”.
Speculation gathered momentum when Anandabazar Patrika, quoting sources close to Rajan, said in a report two weeks ago that he was not interested in a second term, which got some credence when Modi said: “I don’t think this administrative subject should be an issue of interest to the media.”
Now that he has said no, RaghuramRajan is the hashtag trending at the top, mostly in his support.
Infosys co-founder N.R. Narayana Murthy, who has been batting, in fact, for not one but two more terms for Rajan, said: “Have no doubts he will continue to add value to the country. He deserves more dignity than what he was treated with.”
Swamy remained unrelenting. “Raghuram Rajan was an employee of the Government of India. We don’t select employees on the basis of popular vote — and, too, of industrialists,” he said.
Politicians seldom like someone outside their tribe shooting off his or her mouth. But a doctoral degree holder from the Massachusetts Institute of Technology, Rajan has always been outspoken — often getting pushed onto the wrong side of a debate.
The latest being his remarks on India being the king in a land of the blind which did not go down well with many, particularly the BJP leadership and notably Commerce and Industry Minister Nirmala Sitharaman.
But Rajan, who has also served in the International Monetary Fund, has been used to such critics.
Before he shot to global fame with his prediction of a looming global financial crisis way back in 2005, he had to face ridicule from such luminaries as then Federal Reserve chief Alan Greenspan and Nobel laureate Paul Krugman. He had the last laugh, so to say, when that became a reality.
What had started as an academic paper titled “Has Financial Development Made the World Riskier?” also eventually resulted in an Academy Award-winning documentary called “Inside Job”, bringing Rajan further into global limelight.
by admin | May 25, 2021 | Banking, News
Mumbai, (IANS) The Reserve Bank of India (RBI) on Tuesday left its key policy rates and reserve ratios unchanged, concerned over the slight rise in inflation and some domestic and global upside risks that have sprung up since April.
The decision was taken at the second bi-monthly policy review for the current fiscal by Reserve Bank of India (RBI) Governor Raghuram Rajan at its headruarters here. “The inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain,” Rajan said.
In the first bi-monthly policy review on April 5, Rajan had cut by 25 basis points the repurchase rate, or the short-term lending rate for commercial banks on loans taken from the Reserve Bank — to 6.5 per cent from 6.75 per cent.
The reverse repurchase rate for sort-term borrowings was raised to 6 per cent from 5.75 per cent.
by admin | May 25, 2021 | Opinions
By Amulya Ganguli, In addition to the NGOs, including the one run by Teesta Setalvad, the saffron brotherhood’s new target is a formidable one – Reserve Bank of India (RBI) Governor Raghuram Rajan.
Till now, the Hindutva camp hadn’t trained its guns on one so high who is not a politician. There is little doubt, however, that the Sangh Parivar’s motive is political.
The attack on Rajan is not a frontal one. It is a flanking movement with none other than the new Bharatiya Janata Party (BJP) Rajya Sabha member, the perennially combative Subramanian Swamy, leading the charge.
It is not clear if the targeting of Rajan has the approval of the BJP’s top brass, for there are conflicting indications.
While Finance Minister Arun Jaitley disapproves of the personal nature of the attacks, he has been silent on the question of extending Rajan’s term beyond September considering that Swamy wants his immediate dismissal.
However, the problem with Swamy’s offensive – he has accused Rajan of acting at the behest US multinationals to damage the Indian small and medium industries – is that the voluble MP cannot always be taken seriously.
The reason is that he is a maverick to beat all mavericks. As a result, he is perceived of as something of a loose cannon who can go off at a tangent from his party’s line.
As much is clear from his earlier backing of the disgraced godman, Asaram Bapu, to the more recent call for building the Ram temple by the year-end, about which the BJP has been more than circumspect.
Moreover, he is supposed to have been elevated to the Rajya Sabha only to serve a specific purpose – that of needling the Nehru-Gandhis – and not open fire at random.
Swamy has been performing the first task with considerable zeal, pursuing the allegations against the Congress’s first family in the National Herald and AgustaWestland cases.
More recently, he has called upon the Enforcement Directorate to probe the supposed transgressions of the business deals of Robert Vadra, the first family’s son-in-law.
In the midst of these endeavours, the sudden turning of his attention to Rajan is surprising.
In view of the government’s eagerness to maintain friendly ties with the corporate sector, the latter’s unfavourable reaction to Swamy’s antics was only to be expected. The Confederation of Indian Industry has already expressed its displeasure.
None of this is unexpected, for Rajan is known to be a favourite of India Inc. and of the media, especially the financial newspapers.
Narendra Modi’s evasive statement on the issue – he told Wall Street Journal that Rajan’s tenure can be of no interest to the media – is unlikely to clear the scene.
In any event, Modi’s probable view is that nothing should be of interest to the media, which explains why he doesn’t hold any press conferences.
The hullabaloo created by Swamy appears to have persuaded Rajan to decide not to seek a second term although he has described the controversy as evidence of a “noisy” democracy and the “sign of its vibrancy”.
It is possible that Rajan’s observation about India being the king in a land of the blind hasn’t pleased the BJP.
Besides, he is something of an odd man out where the Hindutva camp is concerned, being a typical representative of the urbane, English-speaking, secular establishment that is vastly different from the Hindi-speaking, conservative-minded present-day rulers.
It is not impossible, therefore, that the Rashtriya Swayamsevak Sangh (RSS), the BJP’s mentor, wants to see the back of him.
After all, the RSS has succeeded in placing its nominees in most of the institutions – the Indian Council of Historical Research (ICHR), the National Book Trust, the Film and Television Institute, the Central Board of Film Certification, and so on.
The objective behind all these appointments was, first, to find sinecures for its followers and, secondly, to peddle the pro-Hindu agenda. So, why should the RBI be left in the hands of a purported secularist?
It goes without saying, however, that if India Inc’s blue-eyed boy quits office, the initial effect on the market will be worrisome.
That is not something which Modi will appreciate. But he has generally had to walk a tight rope between the predilections of the RSS and his own more open-minded attitude. There has been a constant give-and-take between him and the Nagpur patriarchs in this respect.
In some matters, Modi has had the upper hand such as in persuading the saffron fundamentalists to go easy on their ghar wapsi and love jehad campaigns.
In others, he has given way to the RSS as, for instance, in the appointments of unworthy nominees to the ICHR and other institutions.
The Rajan affair will be a major test for Modi. Will he bow to the RSS or will he allow his pro-business instincts to prevail ?
(Amulya Ganguli is a political analyst. The views expressed are personal. He can be reached at amulyaganguli@gmail.com <mailto:amulyaganguli@gmail.com>)
