Bhagwati tells Modi to retain Rajan as RBI governor

Noted economist Jagdish Bhagwati has asked Modi to hold regular meetings to communicate his development agenda and work closely with Rajan

GN Bureau | May 20, 2014



Known for showing his unflinching support to prime minister designate Narendra Modi, noted economist Jagdish Bhagwati has suggested retaining Raghuram Rajan as the governor of Reserve Bank of India amid speculation that he could be asked to leave by the new government.
According to media reports, Bhagwati termed BJP’s win as an astonishing triumph of Modi and asked him to hold regular conferences to outline his development agenda in public and work in coordination with Rajan.

“Unlike the UPA leaders, the new PM, who is not tongue-tied, should hold monthly press conferences where he can bring in his agenda and actions before the public and carry them with him,” Bhagwati said.

In the past few months, BJP leaders, including party treasurer Piyush Goyal and senior leader Subramanian Swami have attacked Rajan for his inability to tame inflation. However, Bhagwati does not quite agree with the idea of sacking the RBI governor as the solution to the problem of persisting inflation.

“I also believe that he (Modi) ought to keep Raghuram Rajan. He is a major economist who commands international respect,” Bhagwati added.
Meanwhile, Rajan tried to downplay the problem and had recently asserted the independence of the central bank.

Rajan had said, “I determine the monetary policy. I say what it is. The government can fire me but the government doesn't set the monetary policy. I am happy to talk to the government but ultimately the interest rate that is set is set by me.”  

 

 

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