Chidambaram wonders if Narendra Modi govt 'deserves' Raghuram Rajan

Former finance minister P Chidambaram today wondered whether the Modi government “deserves” Raghuram Rajan, describing him as “one of the most outstanding economists in the world”, amid an unrelenting attack by BJP MP Subramanian Swamy against the Governor. “I am beginning to think whether this government deserves Dr Rajan,” he replied when asked whether he should be given a second term.

Rajan’s 3-year term ends in the first week of September. Interacting with reporters on two years of the Modi government at the Congress headquarters, Chidambaram first chose to ignore questions on Swamy’s attack on Rajan, insisting that the Congress will respond if the Prime Minister and the finance minister speak against Rajan.

Defending Rajan, he said: “The UPA government appointed one of the most outstanding economists of the world as the RBI Governor. We placed full confidence in him at that time and we continue to place full confidence in him today.”

In a letter to Prime Minister Narendra Modi two days ago, Swamy asked him to sack Rajan, charging that his insistence on high interest rate had led to recession in the domestic small and medium industries causing not only a sharp decline in output, but also massive unemployment of semi-skilled labour.

On a question whether as a finance minister, he too had reservations about Rajan’s interest rate stand, Chidambaram said the UPA government had the best of relationship with all central bank governors, including the current one.

“The world over, finance minister and central bank governor engage in such a dialogue that it does not mean the finance minister questions the competence of the RBI Governor.  Each one approaches economy from his or her own perspective.  Government’s perspective is growth. Central bank’s perspective is monetary stability,” he said.

He also made light of Commerce and Industry Minister Nirmala Sitharaman’s comments on Rajan in the wake of his “one-eyed king” remark that caused controversy, saying vote can be taken right here on who is right and who is wrong.