Why Is Media Giving Raghuram Rajan A Free Pass?

The current Governor of the Reserve Bank of India, Mr. Raghuram G Rajan finishes his three year term in September 2016. Over the last few weeks, there has been a media buzz – both domestic and international – with shades of a nasty proxy war.

Let me step back and ask what I see as five key questions (with some observations) about the media narrative.

Why is there a local media uproar over Rajan’s tenure and extension ?

Rajan has a fantastic CV to match a tele/photogenic presence, has spent many years with the GoI in various capacities and has always enjoyed a good rapport with the media. This is evidenced by the fact that he is ready to answer any question on any topic (any day!) unlike most policy wonks or regulators. This proclivity has given him a disproportionate media footprint, not always an asset. Compare this with Janet Yellen or Mervyn King who are known to speak only when they have to and in carefully measured utterances. Only the EU central bank governor, Mario Draghi, can give Rajan a run for his money. And the credit goes to non-stop Europe crises.

Rajan was brought in as the Governor of RBI by none other than P Chidambaram, the former Finance minister. He was given this position in September 2013 a few (crucial) months before the national elections of May 2014. Now, the fact is that Rajan accepted this job to serve a government that was reputed for policy paralysis and execution while being mired in scams of mind boggling proportions. Given the reputation of UPA-II some of the dirt has to stick to Rajan - but the media has chosen to ignore it. The severe damage inflicted on PSU banks’ balance-sheets happened during his watch. Remember, Rajan has been associated with the UPA government from 2007 onwards. So he does not have the excuse of stumbling on the reality only after he took the Governor role when he was already an insider for several years. To recap Rajan’s tenure,

- Chairman of the High level committee on finance sector reforms – 2007-2008
- Economic Advisor to the Prime Minister of India (honorary) – 2008-2012
- Chief economic Advisor, Ministry of Finance, GoI – 2012-2013
- Governor, RBI – 2013 onwards

Why is there no coherent discussion on Rajan’s role and performance?

This is the most disappointing bit in the media narrative. Not one credible article has been published that walks through his various roles, and importantly, his specific achievements. The entire discussion about Rajan’s desirability conflates his pedigree with performance, reputation with results. There have been some broad brushes about how he is reforming the Indian banking system and making India look credible globally. We have not seen any meaningful comparison of performance between him and other RBI governors. Along with informed debates about what other governors from the homegrown RBI pipeline would have done in the same set of circumstances.

Why is the international media sending out `keep Rajan’ signals?

There are many influential voices speaking on Rajan’s behalf in the international media. For sure, Rajan is an extremely well respected figure in the global finance and economics scene. However, respect need not be bound with loyalty to the point of shrill promotion. What is worse is that many have recommended an extension with fairly explicit warnings of dire outcomes for India. This is mystifying on the face of it (and encourages conspiracy theories) but once you peel a few layers off, you will see a strong brotherhood and self-promoting peer group. The bigger point is about Indians getting carried away with Western or international endorsements of Indians. This smacks of low self-esteem among our broader intelligentsia.

What is Rajan’s contribution to the debate?

If Rajan wants to keep this job, should he not directly convey a strong sense of accountability expressed through progress reports? After all, we have a government that broadcasts progress on a daily (whew!) basis.

Our power minister has a dashboard that can be the envy of any Fortune 10 CEO. This lack of transparency and forthrightness allows perception battles and prejudiced opinions to replace informed debates. This is already playing out as a disservice to Rajan who, I am sure, will want to be recognised for performance and not be seen as someone who lobbied his way to an extension.