Raghuram Rajan Never Stood A Chance With Modi Sarkar

Raghuram Rajan’s speech in which he mentioned – almost as an aside – that he had been forced out as India’s central banker was delivered with the grace that’s been typical of his short career in Indian public life. It was also a master-stroke: it sent out the clear message that Rajan had work still to do, but the government’s signals to him that he was grossly unwelcome left him with no alternative but to go.

But Rajan’s days were, in fact, numbered – from May 16, 2014.

When Narendra Modi was swept into power, one of the most important words being hissed by the more fanatical of his supporters was the word “ecosystem”. They believed that Modi’s primary job was to clear out the detritus of “67 years of Congress rule” (so much for Vajpayee!) and evict the many dangerous liberals that infected the corridors of power. Unless the “ecosystem” was turfed out along with Manmohan Singh, too little would change. Everyone who had been associated with earlier administrations, in any shape or form, was suspect.

Modi, it seems, agreed. Signs of this were evident very early on. For example, a month or so in, every competent bureaucrat who had happened to work closely with a minister in the previous government – and had been picked by a minister in the new one for a similar role – was essentially told that there was no future for them in Delhi. Famously, this meant the Home Minister himself was told his choice of Private Secretary was unavailable.

That the government was willing to take this to extremes was evident from the dithering over appointing the eminently qualified Arvind Subramanian to the post of Chief Economic Advisor. According to a PTI report at the time, the PM “did not like the concept of names of same set of persons coming up for consideration every time there is a vacancy” (sic). If someone had been considered for a job by the UPA, then they were part of the “ecosystem”, and part of the problem. (Thankfully, Finance Minister Arun Jaitley got Subramanian through and now, by all accounts, he enjoys his bosses’ trust.)

Rajan’s forced departure is the latest indicator of this sort of thinking. All the brouhaha over the appointment of such leading lights of the intellectual firmament as Gajendra Chouhan, Pahlaj Nihalani and Chetan Chauhan to various posts misses the point. Their appointments are a natural corollary of a government determined to stock every post with what Indira Gandhi’s left-wing loyalists used to call the “committed”: people dedicated to the Modi agenda. Rajan is just the freshest casualty of a mind-set evident from the very beginning. That Rajan knows this is plainly evident from a little-noticed aspect of the message to RBI staff in which he announced his departure: he specifically thanks two members of the RBI board who were let go by the Modi government. One was Ela Bhatt of Sewa – who has done enormous work for women’s empowerment in Gujarat, but was famously left out by Modi when listing such people in a well-known campaign speech on the subject. And the other was nuclear scientist Anil Kakodkar, who quit the IIT Bombay board after a disagreement with the Modi government.

That Rajan was forced out in a sneaky and underhanded sort of way is also pretty depressing – and shows how much less grace his detractors in government have than he does – but shouldn’t be too surprising either. One would think a government that prides itself on blunt, no-nonsense strength would just come out and say: “Rajan, you’re fired”. None of this firing over the shoulders of Subramanian Swamy, Indian Twitter’s own Donald Trump. But, remember, Modi has been happy to let foot-soldiers do the dirty work – whether of ensuring communal tension stays on the boil, or of going after “undesirables” – while he himself floats above the fray like a karmayogi.

What this reveals, incidentally, is that all the hopeful chatter that Modi is cutting down on cronyism is either brainless or uninformed. Not just because Rajan made it his primary job – in keeping with his academic work on the subject – to cut down on cronyism. But also because putting your own “committed” into decision-making positions is precisely what cronyism requires. (In any case, you have to be a special kind of stupid to imagine that crony capitalism and corruption has vanished when the BJP has enough money to buy the front pages of every newspaper every time it fights a minor election.)

Consider one common claim: that “phone calls from Delhi have stopped” to public sector banks, telling them who and what to lend to. That may well be the case, and that’s great. But nobody, surely, can have a problem with the boards of those banks telling management what to do? And suppose you quietly start placing your committed members on the boards of those banks? Suppose, as a purely hypothetical example, you nominate your local party leader in a particular western Indian city to the board of a bank named for that city? This is not cutting down on cronyism and corruption. It is institutionalising it, and insulating it from outside examination. No phone calls from Delhi are made – because none will be needed.

So, what’s different? Doesn’t every government promote loyalists? Well, a comparison with the previous administration is interesting. After all, nobody can claim the UPA was merciful to those whom it thought were associated with the Sangh or Modi. But, still, remember who played a leading role in publicising the big UPA “scams”: Comptroller and Auditor General – and world champion headline-chaser – Vinod Rai. Appointed, remember, by that very government as its auditor. Now imagine what happens when, under a Modi administration, only “committed” people are appointed to such posts. Voila! Corruption magically vanishes.

Rajan, whom the rest of the world might imagine to be a man with a mind of his own, is fatally tainted in the eyes of those who run things in India now for the cardinal sin of being appointed by the previous administration. Rumours are rife in Delhi of some of the accusations against Rajan that the government considered disqualifying: that, for example, he once met privately with Rahul Gandhi – long before becoming RBI governor – to talk economics. That thankless task would in itself be enough to become a part of the “ecosystem”, and thus to be untrustworthy.

The government’s leaders talk often of a Congress-mukt Bharat. They are refreshingly serious and open about this goal. The problem is just that they are perhaps a little paranoid about who and what the Congress is. A 44-seat party in terminal decline is not quite the threat they make it out to be; and everyone who co-operated with a previous government is not immediately compromised, beyond the pale. The “ecosystem” is a myth. India does not need a denazification programme.

But when paranoia rules, there is no place for the sane.

(Mihir Swarup Sharma is a fellow at the Observer Research Foundation.)

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.


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