Supporters of the Government have got it all wrong, besides tge government itself, of course. The exit of Raghuram Rajan is not about whether we can get another competent RBI Governor – of course, we can. RBI is one of our finest institutions; It is also not about whether RRR was right or wrong in keeping the interest rates relatively high with the objective of taming inflation – we can debate this ad-infinitum without a clear and final answer emerging from that debate. It is rather about the aspects outlined below:
1. His exit builds a perception that crony capitalism has actually won. Under RRR, the RBI has initiated a cleanup of balance sheets for the entire banking system which has resulted in corporate stress at the top levels. This would also have resulted in the noose tightening around top brass of some of the PSU banks without whose involvement the levels of NPAs would never have ballooned the way they did. We may eventually expect detailed bailout packages for distressed corporate and PSU banks funded with taxpayers’ money.
2. It is also a signal that we do not have space for alternative voices that disagree with the current dispensation – that they will be targeted in the worst possible personal manner and the ruling dispensation will encourage them by maintaining an eery silence and later claim that they never supported the personal attacks.
3. It is also not about whether one side registered a win over another because RRR was surely not fighting a political war. Whatever may be your disagreements with his policies – no one can take away from him his high intellect and the relevance of his ideas. As a country we still have to learn to treat individuals, specially those who disagree, with the dignity they deserve.