“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.” … writes Rajan in his farewell letter, as he plans to be back at the University of Chicago, this September.
Rajan took over as the 23rd Governor of the Reserve Bank of India on September 4, 2013, at a time when the rupee was trading near a record low of 68.85 per dollar. He listed out his achievements in his letter. Right from stabilizing rupee to battling a double digit inflation rate he did it all. It was due to his sustained policy focus which helped RBI to bring inflation to below 5 per cent. When Dr. Rajan took over as RBI chief, India was ranked amongst the "Fragile Five" countries, indicating high inflation, currency volatility and uncertain growth. Today, as he plans to leave, we are the fastest growing large economy in the world, having long exited the ranks of the Fragile Five.
Rajan thanked his team at the RBI. "I am confident that my successor will take us to new heights with your help. I will still be working with you for the next couple of months, but let me thank all of you in the RBI family in advance for your dedicated work and unflinching support. It has been a fantastic journey together!" his letter read.
Dr Rajan is currently is on a leave from the University of Chicago, where he is the Distinguished Service Professor of Finance at the Booth School. He has been the Chief Economist and Director of Research at the International Monetary Fund. He is also a member of the 'Group of Thirty' , was the President of the American Finance Association in 2011 and is a member of the American Academy of Arts and Sciences. In January 2003, the American Finance Association awarded Dr Rajan the inaugural Fischer Black Prize for the best finance researcher under the age of 40.
Rajan was appointed RBI Governor by the previous UPA government for a three-year term, which could have been extended. He had been at the target of Subramanian Swami who questioned his “Indian-ness” citing that he is in India on a Green Card provided by the US government. Also, bad loans with public sector banks has doubled to Rs 3.5 lakh crore in two years, the BJP MP said. In response to this ‘targeted’ campaign against him, Dr Rajan said, "Indian-ness, love for your country is complicated. For every person there is a different way that you show respect for your country... My mother-in- law will say karmayogi is the way to go -- do your work."
Rajan always had an opinion and more importantly expressed it openly. He chose his alma mater IIT-Delhi to make a plea in support of tolerance following the Dadri lynching. Such remarks and hard stands on key issues often made him stand against the North Block. It probably is this politics that reduced his appetite for a second term.
The Economic Times' Swaminathan Aiyar even said that Rajan leaving would see billions of dollars in investment also follow him out of the country.
It remains a question that will India get anyone with the international reputation and stature of Rajan as his successor.