Why Rajan is no Bond
I am not an expert in economics, but I know a thing or two. I know that the forex value of a currency itself doesn’t say anything about the health of the economy. I understand economics is a matter of political philosophy as much as it is a technical subject. I know that the role of RBI governor is that of a technocrat, not immune to the political influences of the powers that be.
Yet, the appointment of Rajan has created such a viral in Indian media and popular culture, that he is dubbed anything from James Bond, to the future-teller, to the end of India’s economic misery, to the god himself.
This is not without precedence. I recall two parallels in the history of India where an otherwise boring role/ position gained popular traction, because of the people that took it.
One: TN Seshan
No doubt, TN Seshan’s role as the 10th Chief Election Commissioner in 1990 caused enormous changes in the administration of elections and ultimately the democracy of India. He is a true leader and change agent. Seshan’s impact was felt and the popularity, in hindsight, was not without substance. But erstwhile, the role of CEC wouldn’t even a find a place on Page 8 on the national newspapers.
Two: APJ Abdul Kalam
Prior to APJ, Presidents of India were mostly old people, created little or no impact, offered no real leadership and performed a limited set of procedural activities.
APJ broke stereotypes — he was young, he was the new-age guy, he was a scientist, a successful one at that, he had a vision, he had supreme oratory skills, he somehow got the young generation to listen to him and he influenced millions of people.
But what India didn’t realize was that APJ too taking a figurehead role and his ability to manage or influence real issues was closer to none.
History repeats: Raghuram Rajan
Rajan is the 23rd Governor of the central bank of India. But unlike CECs prior to Seshan and unlike (most) Presidents prior to APJ, RBI has had some eminent governors — including arguably the most educated man in the world, Dr. Manmohan Singh. Even Duvvuri Subbarao, the outgoing RBI governor, did a fairly decent job considering the dynamics of the world he was operating in.
Let’s face it — unlike some other countries, RBI isn’t nearly an independent body, as we would like to believe. Sure it takes skills, experience, and knowledge to do the job — but without jumping the hoops held by the Prime Ministers and Finance Ministers (and shadow powerhouses like Sonia), the RBI couldn’t do much. The role of RBI is significant, but the political will of the elected powers will ultimately decide which of Rajan’sreforms go through and what don’t.
I have the highest regards for APJ and highest hopes for Rajan. I hope much like in the case of CEC, public awareness of the role of RBI, recognition of his actions and the constant media-watching, will provide him the visibility and also put the pressure on him to do what’s right.