Experts: Rajan’s exit bad omen for Indian economy

File Photo: RBI Governor Raghuram Rajan. Photo - PTI

File Photo of RBI Governor Raghuram Rajan | Dr. Rajan recently announced his decision that he won’t be continuing as the RBI governor with his first tenure ending on September 4, 2015. Photo – PTI

Calling RBI Governor Raghuram Rajan’s exit a ‘bad omen’ for the Indian economy, eminent economists and former policymakers today said it will be seen by the world as India’s non-approval to a policy against inflation and bad loans.

Rajan’s colleague at Chicago University Booth School of Business Luigi Zingales termed it is a “huge loss for India”, while Harvard University professor Gita Gopinath said it was “deeply disappointing” that the government instead of fighting hard to keep Rajan has let him go amid all the distasteful comments by those questioning his commitment to India’s best interests.

Indian-origin economist and British Labour Party leader Meghnad Desai said he feels “sorry for India’s reputation abroad”, while World Bank’s Chief Economist and India’s former Chief Economic Advisor Kaushik Basu said Rajan has been one of the finest central bank governors anywhere.

53-year old Rajan, a former IMF Chief Economist with a reputation to have rightly called the 2008 global financial crisis, yesterday made public his decision against a second term as RBI Governor after his currently three-year tenure ends on September 4, 2016.

Rajan, the on-leave Professor of Finance at Chicago Booth School of Business, said he would return to academia but would be ready to serve India again in future.

Rajan indicated he was willing to take a shot at a second term, saying he was “open to seeing” through his unfinished work on containing inflation and cleaning up the books of bank, but said no to a second term “on due reflection, and after consultation with the government”.

This is being seen in some quarters as his unhappiness over the way things have developed in recent months with regard to a barrage of personal attacks on him from some quarters and the government reaction to that.

Echoing the sentiments of various top industry leaders from India, who termed Rajan’s exit as ‘nation’s loss’, the economists from abroad and the former policymakers back home said it can prove to be “very costly” for Indian economy.