Former Reserve Bank of India governor Raghuram Rajan has been in the news again with Union Finance Minister Nirmala Sitharaman attacking him for the poor health of India’s economy and the condition of the banking sector.
While addressing a meeting in Columbia University, the minister in reply to a question commented, “It was in Rajan's time as governor of the Reserve Bank that loans were given based just on phone calls from crony leaders. Public sector banks in India till today are depending on the government's equity infusion to get out of that mire.”
Rajan promptly corrected her, pointing out that he was with the BJP government for three-fourths of his term as the RBI chief (2013 to 2016) and claimed that during his tenure a clean-up of the banking sector, that was "clogged" with bad loans had begun. “And the job remains unfinished,” he said, thus throwing the ball back in the finance ministry’s court. Interestingly, Sitharaman had clubbed former prime minister Dr Manmohan Singh with Rajan in her criticism.
There are many who wonder whether Rajan could be the dark horse and be the next Manmohan Singh of the Grand Old Party if the Congress needed such a credible face. The party has lost the economic narrative. Sonia Gandhi coined the slogan of ‘aam aadmi’ in 2004, which clicked for 10 years but for the past five years, it remains clueless.
What the Congress needs is a good economic narrative and Rajan has good relations with the Congress bosses. Some point out that if the Congress needs another Singh, Rajan fits the bill. It must be noted that just before the 2019 Lok Sabha polls, several articles appeared promoting Rajan even as a possible PM face. He was seen as one of the best appointments of Manmohan Singh.
However, it is quite premature to speculate on this, but it is a fact that Rajan has been using various forums to criticise the Narendra Modi government and the BJP, too, has not spared him as was seen in Nirmala Sitharaman’s recent outburst. The party needs someone to fix the blame and has targeted Rajan and Manmohan Singh in this regard.
It should be noted that when PV Narasimha Rao was looking for an internationally known face in 1991 when he took over as prime minister, he identified Dr Manmohan Singh because India was looking for funds from the World Bank and the International Monetary Fund as the country was going through a severe foreign exchange crisis.
The economy was at its worst. Rao first offered the job to IG Patel who was then director of London School of Economics, but the latter declined to take it. The next choice was Dr Manmohan Singh who had held many important positions in the government. Singh soon became the face of the reforms as Rao protected him politically from even his own party.
Since then, Singh’s political career path took off, taking him to the peak. Known as a technocrat and not a politician, when the Congress president-ship changed hands from Rao to Sitaram Kesri and then to Sonia Gandhi, Singh was also involved in all political process. But he won the jackpot when Sonia Gandhi declined to become the prime minister in 2004 and chose him as her nominee.
While he looked after government affairs, Sonia Gandhi took care of the party. This division of labour worked so well that when the party came back to power in 2009, Sonia asked him to continue. Singh, thus, had a good 10 years in office, providing a stable coalition government.
The similarities between Singh and Rajan are many. Both have held various positions in the Indian government and international institutions. Both have doctorate degrees from excellent foreign universities. Both had been the governors of Reserve Bank. Both are credible and internationally known economists with broad acceptability. Rajan is a familiar name among the middle classes, the same constituency as that of Manmohan Singh.
The glaring dissimilarity is that Singh had been the prime minister for 10 years, while Rajan is yet to make his debut in politics. Singh is from Punjab, while Rajan is from Tamil Nadu. Also, Rajan is much younger and often described as a rockstar, while Manmohan Singh has kept a low profile. Moreover, his vote catching capacity is not tested yet.
Rajan’s economic vision is bold and clear. He said in a recent interview, “India needs far stronger growth, but it is not going to come from tinkering. It really needs another generation of reforms. Good news, the government has political strength and the power to undertake those reforms. Bad news, it hasn't done so yet."
There are two doubtful points here. The first is whether the Congress would choose him as the next Manmohan Singh. The second is one successful stint as the RBI governor need not necessarily mean he would emerge as a success politically.
“If there is an opportunity to be of use, I will always be there,” Rajan incidentally said at the launch of his much-publicised book The Third Pillar in March.
This indicates that he is available. All that he needs is the help of Dame Luck.
(The author is a political analyst. Views are personal)