How illiterate can we get!

Within a few days of his announcement as the next Reserve Bank of India (RBI) governor, a vicious rumour was circulated on Twitter that Raghuram Govinda Rajan didn’t have an Indian passport.

While there’s little in the RBI Act, 1934, to endanger a foreigner’s appointment, in fact, even globally, the British central banker is a Canadian, the matter was deemed serious enough by senior BJP leader Murli Manohar Joshi to raise a stink.

Finally, the government shared the guv-designate’s passport copies with Joshi, and the hue and cry subsided.

Within a few days of taking over, Raghuram Rajan, or RRR as he’s being indulgently addressed on social media, reactions have swung to the other extreme.

From questioning his nationality and allegiance, we’re now seeing him as the knight in the shining armour, only man who can save the Indian rupee.

Even as RRR has gone the on record that the measure of his success isn’t Facebook ‘likes’ and the fact that the value of a currency is driven by a host of economic factors beyond the remit of the central bank, the fact remains that RRR has been projected as the last man standing against a rapacious political class.

Nothing can be more stupid.

Three counters bear repetition here:

First, before considering RRR as autonomous, and his predecessor D Subbarao a mouse, don’t forget that both act(ed) within the constraints of the RBI Act.

Even a bald reading of clause 7 of the Act will make this clear enough (context in brackets):
 
(1) The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.

(2) Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank.

(3) Save as otherwise provided in regulations made by the Central Board (and hence the Central government), the Governor and in his absence the Deputy Governor nominated by him in this behalf, shall also have powers of general superintendence and direction of the affairs and the business of the Bank, and may exercise all powers and do all acts and things which may be exercised or done by the Bank.
 
So, clause 7 (1) should leave no one in any doubt who the RBI governor’s boss is.

Also, how utterly illiterate it will be to pronounce RRR as Rambo!

In the culminating weeks of the Subbarao regime, finance minister P Chidambaram had to put this reality across pretty bluntly.

To his credit, Subbarao too, on more than one occasion, admitted that the RBI governor is an unelected official, and he therefore needs to be subjected to accountability before making too many noises about autonomy.

Subbarao’s favourite stop for accountability was a select committee of parliament; but perhaps having been a finance secretary in an earlier avatar, he never made a direct pitch to be treated outside the control of the finance minister.

Nor will RRR; he’ll be shown 7(1).

This being the case, a second and related fact bears repetition. That’s about the designated role of the RBI governor, i.e., managing inflation, nudging growth, and maintaining monetary stability (read rupee).

A strict interpretation of this KRA ought to be that RRR is the taxpayer’s hope against profligacy, say, audacious social sector schemes like the Food Security Bill, that the political class just voted upon.

Some may even fantasise that the guv will refuse to oblige the government in the run-up to the general elections.

But look at the self-image that RRR has candidly shared in the inaugural statement after taking over on September 4 (context in brackets):

I talked about the primary role of the RBI as preserving the purchasing power of the rupee, but we have two other important mandates; inclusive growth and development (isn’t that food security bill?), as well as financial stability. As the central bank of a developing country, we have additional tools to generate growth – we can accelerate financial development and inclusion. Rural areas, especially our villages, as well as small and medium industries across the country, have been important engines of growth even as large company growth has slowed. But access to finance is still hard for the poor, and for rural and small and medium industries (loan waivers?). We need faster, broad based, inclusive growth leading to a rapid fall in poverty.
 
This makes it obvious enough that RRR isn’t planning to be a Vinod Rai, comptroller and auditor general until recently, who after having been appointed by the ruling executive, claimed constitutional authority to bite at the very hands who selected picked him up.
 
There’s a third fact that proponents of the “RRR Rambo” theory forget. That tact and clear-headedness, not bull-headed conflict, have been the new guv’s middle name.

You can ascribe this to his formative years as a diplomat’s son. Or the resultant number of years he spent in cosmopolitan capitals of the world, before imbibing the very best of Indian education: Delhi Public School RK Puram, the IIT, Delhi, and the IIM, Ahmedabad.

Only a clear-headed man would keep add to this awesome academic record, a doctorate in economics from Massachusetts Institute of Technology (MIT), a distinguished-service faculty position at Chicago’s Booth School, take a few years out at the International Monetary Fund with title of chief economist, question Larry Summers at Jackson Hole and wow the world on being proved right, chair India’s own foray at financial sector reforms (at the age of 45 in 2008), be Manmohan Singh’s honorary advisor during UPA-1, and still have goodwill left in the kitty to be picked up as chief economic advisor (CEA) in August 2012. Remember, this was the time of change of guards between Pranab Mukherjee and Chidambaram – anyone who knows PC would know what he would have done to a rock-star. But what did he do? RRR was pulled out from the traditional ground-floor room of the CEA and given a room right next to the FM on the first floor!

Does anyone seriously expect such an extraordinary to be anything but the epitome of teamwork and acceptability across political circles?

Particularly when he had the RBI job in his mind for a very long time?

Hint: There were, a common friend told me, enough times when it made sense for RRR to change his Indian passport. Any guess why he didn’t? Therein lies the code to RRR vs Rambo/Rockstar. He’s simply, er…Raghuram! He’d better be that, as the honeymoon recedes into reality.

(This story appeared in the September 16-30 issue of the print magazine)