Friday, August 09, 2013

Raghuram Rajan: Some conspiracy theories

Vitiated political environment invariably produces many conspiracy theories about any move by the government. Many onlookers are surprised that the next RBI Governor's name has been declared three months ahead of Subba Rao's departure and on top of that he would join the central bank immediately. Inevitably some conspiracy theories contradict each other.

Theory 1: Chidambaram was batting for Arvind Mayaram, his confidante in Finance Ministry. PC was bringing pressure on Manmohan Singh. The PM was not for Mayaram. So , before pressure could build up further via Sonia Gandhi, Singh decided to preempt PC. How credible is this theory? Does Singh ever take fast decisions? Isn't Chidambaram a cheetah and Manmohan only a mouse?

Theory 2: Rajan as advisor to Finance Minister was more an impediment to PC since he was too independent. So PC was looking for a quick opportunity to dump him. Rajan would hopefully (for PC) be less of a nuisance at Mint Street than in North Block. Despatching Rajan as OSD for three months lends credence to this theory. Antithesis: Is PC so myopic?

Theory 3: How did the IAS lobby allow a non-IAS to become the Governor? Of course, there have been many Governors of RBI who were not 'blue blooded'. This time the civil servants deliberately let one not from their clan to become the Governor as they know very well that the present economic situation is too perilous to be managed successfully by RBI. It suits them that an IIT, IIM, MIT alumnus who also taught at Chicago and worked for IMF would get his hands dirtied and reputation sullied so that the government would become 'wise enough' next time to fall back on the 'infallible' IAS folks.

Theory 4: PC had recommended Vinod Rai for the post of CAG. Once appointed, Vinod Rai was not 'grateful'. So this time PC was not interested in pushing his candidate (Mayaram) too far. Rajan was nobody's candidate. Sometimes, it helps if one is not sponsored by anyone.

You may choose your pick. 

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