Stepping up his attack on RBI Governor Raghuram Rajan, BJP MP Subramanian Swamy has urged Prime Minister Narendra Modi to sack him immediately claiming he was “mentally not fully Indian” and alleging he has “wilfully” wrecked the economy.
However, senior Congress leader Jairam Ramesh reacted sharply to the attack on Rajan saying why Swamy does not hit his “real target” Finance Minister Arun Jaitley but “set up dummy targets” like the RBI Governor who cannot speak out.
BJP spokesperson on economic affairs Gopalkrishna Aggarwal said Swamy is a senior leader whose opinions “definitely matters” but added the final say will be with the government.
Following up on his barb last week that Rajan should be sent back to Chicago, Swamy has written a letter to the Prime Minister Swamy saying how a person appointed by the UPA government should be continued in the post.
“I cannot see why someone appointed by the UPA government who is apparently working against Indian economic interests should be kept in this post when we have so many nationalist-minded experts available in this country for the RBI governorship,” he said.
The newly-nominated MP urged Modi “to terminate the appointment of Dr Raghuram Rajan in the national interest.”
“The reason why I recommend this is that I am shocked by the wilful and apparently deliberate attempt by Dr Rajan to wreck the Indian economy,” he said adding his concept of raising interest rates to contain inflation was “disastrous”.
Also, bad loans with public sector banks have doubled to Rs 3.5 lakh crore in two years, he said.
Rajan was appointed RBI Governor by the previous UPA government in September 2013 for a three-year term, which can be extended.
“These actions of Dr Rajan lead me to believe that he is acting more as a disrupter of the Indian economy than the person who wants the Indian economy to improve.
“Moreover he is in this country on a Green Card provided by the US government and therefore mentally not fully Indian. Otherwise why would he renew his Green Card as RBI Governor by making the mandatory annual visit to the US to keep the Green Card current?” he wrote.
At an event here on Monday, Jaitley had declined to wade into speculation whether Rajan would get a second term or not.
“As far as finance ministry and RBI are concerned, there is an institutional relationship between the two. It is a very matured relationship. We at the highest level at the two institutions have discussion and each other’s view is considered between us,” the minister had said.
Swamy had last week stated that Rajan was “not appropriate for the country” as he had in the garb of controlling inflation raised interest rates leading to “collapse of industry and rise of unemployment in the economy”.
Rajan’s three-year term ends in early September and if an extension is denied, he will be the first RBI Governor since 1992 to not have a five-year term.
His predecessors – D Subbarao (2008-2013), Y V Reddy (2003-2008), Bimal Jalan (1997-2003) and C Rangarajan (1992-1997) had five-year terms.
After assuming charge as RBI Governor in September 2013, Rajan gradually raised the short-term lending rate from 7.25 per cent to 8 per cent and had retained the high rates throughout 2014.
He kept the rates high, citing inflationary concerns despite intense pressure from the finance ministry and the industry for softening them with a view to boosting growth.
The Governor began the process of lowering the rates in January 2015 and since then it has come down by 1.50 per cent to 6.50 per cent.
Ramesh said RBI was a respected and venerable institution and beyond politics. Rajan is one of the most eminent central bankers in the world, acknowledged authority in finance and monetary economics.
“Why doesn’t Dr Swamy come out and hit the real target. His real target seems to be the Finance Minister. Why set up dummy targets like the Governor of Reserve Bank who can›t speak unfortunately. Governor is not going to enter into a public spat,” he said.
Swamy, who was earlier this month nominated to Rajya Sabha by the BJP government, said Rajan›s concept of containing inflation by raising interest rates was “disastrous”.
“When the wholesale price index started to decline due to induced recession in the small and medium industry, he shifted the target from WPI to the consumer price index which has not however declined because of retail prices. On the contrary it has risen.
“Had Dr Raghuram Rajan stuck to WPI interest rates would have been much lower today and given huge relief to small and medium industries. Instead they are squeezed further and consequent increasing unemployment,” he wrote.
Rajan, Swamy said, was “acting more as a disrupter of the Indian economy than the person who wants the Indian economy to improve.”