Friday, August 23, 2013

Will Raghuram Rajan make a difference?

RBI applies "Fit and proper" guidelines while considering important appointments in various banks. By the same token, there is no doubt that all its Governors so far (Manmohan Singh included) have satisfied this requirement. For example, no one will question the fitness of say Y.V.Reddy or Subbarao for this post. Raghuram Rajan is certainly a suitable successor. So his appointment as RBI Governor is unlikely to catapult the central bank in a different trajectory.

If he had replaced Manmohan Singh as our P.M., our fortunes would have changed for the better. This is of course an impractical wish. Making Rajan RBI Governor (without assurance of his independence) is like asking a Mercedes Benz car driver to drive a rickety bus on a patchy road towards a precipice in utter darkness.

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