Everyone and everything—including India’s currency—is going crazy over Raghuram Rajan

Please stay. India loves you.
Please stay. India loves you.
Image: Reuters/Danish Siddiqui
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First there was the politics. Then there were petitions and advertisements. And now even India’s currency has joined the bandwagon.

Reserve Bank of India (RBI) governor Raghuram Rajan’s tenure is set to end in September, and the brouhaha over him continuing for a second term is growing by the day.

Yesterday (June 1), the Indian rupee fell 0.3%. That was a little odd because just a day earlier India reported strong GDP numbers. On a normal day, this would have strengthened the rupee. But this fall was due to reports suggesting that Rajan doesn’t intend to stay on at the RBI.

A June 1 report in the Anand Bazaar Patrika, a Bengali newspaper from Kolkata, cited sources close to Rajan to say that he has told the government he does not want a second term and wishes to return to the US. Rajan is currently on leave from the University of Chicago’s Booth School of Business where he is a professor of finance.

“The trigger for the drop (in rupee) seems to be the Rajan report,” Paresh Nayar, head of currency and money markets at FirstRand’s India arm told Bloomberg.

“Some rumours that the governor may not go for a second term led to reducing of short positions,” Ashtosh Raina, head of forex trading at HDFC Bank, told Reuters. ”Otherwise the rupee was expected to be strong today on the good GDP numbers.”

Rajan has had a successful three-year term. The 53-year-old—named the Central Banker of the year for 2016 by The Banker magazine—has contained inflation, embarked on a massive clean-up of bad loans in Indian banks, and made financial inclusion a top priority in Asia’s third-largest economy.

The buzz

The endless public discussion around Rajan’s second term is a tad unusual, given the routine nature of the process.

Past RBI governors haven’t got so much attention, according to Sanjaya Baru, a consulting fellow at International Institute for Strategic Studies and former newspaper editor.

“It is not first time a new government may want to change the governor. This has happened before. But this time the media, and the Congress party, seem to have some special interest in the issue that I cannot understand,” said Baru who also served as media advisor to former prime minister Manmohan Singh. Singh himself helmed RBI between 1982 and 1985.

There also seems to be considerable public demand for Rajan to continue. The youngest chief economist of the International Monetary Fund, Rajan has been admired for his sharp analysis and engaging speeches that touch upon topics beyond the economy, such as corruption and education. This connect with the masses is something that past governors have lacked.

That’s perhaps why there is already an online petition seeking a second term for Rajan, which has over 50,000 signatures. ”He (Rajan) has been doing a great job by balancing and manoeuvring Indian economy through the populism which endangers it… He is very crucial for the Indian growth story,” the petition declares.

An online poll by, a unit of the Economic Times newspaper, showed that 87% of the 9,168 readers who participated wanted him for a second term. Another poll by the newspaper, which covered 43 Indian CEOs, also showed that 90% respondents want him to stay.


However, some senior politicians have voiced absurd criticisms about Rajan. In a series of attacks over the last few weeks, Subramanian Swamy, a Bharatiya Janata Party leader and member of the Rajya Sabha, has questioned Rajan’s competence, and loyalty alleging that he has been a “disrupter of the economy”.

Rajan was appointed by the Congress-led UPA government in 2013, but prime minister Narendra Modi’s equation with the central banker seems to be cordial.

Reuters reported on June 1, that in a meeting with finance ministry officials in December, Modi told the bureaucrats to not engage in any public spat with Rajan. Reuters further said:

The moment marked a turning point in ties between the heads of the newly installed government and the Reserve Bank of India (RBI). Since then, Modi and Rajan have developed a close working rapport, government officials and people close to the governor say, and that could be crucial to the $2 trillion economy.

And for what it’s worth, Amul—India’s largest dairy producer—has also declared its support for Rajan through one of its famously witty advertisements.