Three days before completing his term as the Reserve Bank of India Governor, Raghuram Rajan on Thursday said he was willing to stay a bit longer but could not reach the “right kind of agreement” with the government on extension of his tenure.
“Because of … unfinished task, I was willing perhaps to stay provided we could reach the right kind of agreement, we didn’t. That’s where it ended,” said Rajan in an interview to journalist Karan Thapar telecast on the India Today channel.
When asked about if he had any unfinished task, Rajan said: “We built a platform, still on that platform you have to build more buildings… The tasks are not completely finished. There is this clean up of banks, which I hope will be done by March, 2017.”
Rajan defended RBI’s interest rate policies as well as his speech on perceived growing intolerance in the country. Rejecting criticism of having spoken ‘out of turn’ on various occasions, Rajan said it was the ‘legitimate duty’ and ‘moral responsibility’ of public figures to tell young minds what good citizenship is about and the virtues of tolerance. Asked about why he didn’t reach an agreement with the government on a second term, Rajan said he saw it as a three-year duty even though some differences may have cropped up over period of his extension. “There were variety of places where differences may have been in terms of horizons and this and that. I think we just didn’t reach an agreement where … remember my term came to an end, so it had to be a new term.” Rajan said he was engaged in a dialogue with the government “whether it made sense for me to continue.”
“When I got into this job, I saw this as a three-year term. I also realised or recognised I needed to go back to academia. Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back. Question was how much time,” he said. Asked if he was disappointed, Rajan said, “In terms of unfinished tasks, it is always good to finish and look back and say I have sealed and signed it.”
Speaking on his interest rate policies, Rajan said the RBI “used all the room” that it had to cut interest rates and there was no further space available to cut rates. He said he expects inflation rate for August to remain below 6 per cent and decline thereafter. On criticism that Rajan was slow in reducing interest rates, he said “you cannot respond to the clamour of the moment.”
Asked about what he had in mind when he made the speech at IIT-Delhi in October last year, Rajan said, “… I had the environment certainly at the back of mind where there was a discussion certainly about tolerance.”
“It was a topical issue,” he said. “But a week after I gave the speech, I met a Cabinet minister who said I have been saying exactly these things. So it wasn’t as if it was ‘anti government’. Which government is going to preach intolerance?” he said. Stating that the reporting of the speech was that it was an anti-government speech about intolerance, he said, “The actual content of the speech is a plea for tolerance because it is in the best tradition of India and continuation of tradition into the future. It was not about saying we have a intolerant environment. It was a plea for continuing our tradition.”