The similarity of the high-voltage impact that Prime Minister Narendra Modi and RBI governor Raghuram Rajan had on the sentiment of the markets and the economy when they assumed their respective posts is uncanny. Both happened at a time when India needed them as an antidote to the policy paralysis of the earlier government.
Dr Rajan, who completes one year in office on Thursday, took over last year when the rupee was at its weakest. He stopped its slide, stabilised it, and has now taken it higher against the dollar. Like Mr Modi, who galvanised the bureaucracy and his ministers, Dr Rajan shook up the staid RBI with his dynamic personality and ideas. His achievements — including being chief economist at the IMF, predicting the crash of 2008, being an author and almost a people’s economist — were things the RBI had not witnessed in decades. But he wore all this lightly as he set the agenda on what he would be doing on day one.
Since then it has almost been a decision a day, keeping the RBI staff on their toes and setting the RBI in mission mode. The markets adored him and gave him the thumbs up like they did Mr Modi. The honeymoon continues. Business and industry is disappointed at the high interest rates and Union finance minister Arun Jaitley hopes for a rate cut. But Dr Rajan is keeping everyone guessing about his next move as he enters his second year at the helm of India’s central bank.
