How do you see performance of Raghuram Rajan in comparison to other RBI governors specially the current one?

I think comparison would be difficult specially with the current one. You can compare apple to apple, but you can not compare apple to orange. You can compare Maradona with Pele, you can compare Virat Kohli with M S Doni. But how do you compare the performance a footballer selected to lead Indian cricket team with performance of Tendulkar? Can you choose a doctor of medicine for the position of a cardiac surgeon? A dignified doctor of medicine would never accept the position of Cardiac surgeon or lead a team of cardiac surgeon, that would be disrespect and disgrace to both the field.

But here is a case where people sitting at top select a doctor of medicine to lead a team of cardiac surgeon, a subject which he never studied, but he happily accept the role. Now you can decide whether it is possible for him to do justice to the role. All your life you have practiced medicine and at the fag end of your life you want to head a team of cardiac surgeon. ( the examples are just to illustrate- no disrespect mean to any profession ) The moment you leave your domain you lose all your credibility. In the new role you just can be a rubber stamp for the people who appointed as a mark of your gratitude. You can also understand the resentment of the team members whom you are supposed to lead. In such a situation do you think that you will get best of cooperation, or discharge your duty to the best ? Or do you think that you would be able to lead your team to glory?

So you can understand role of the current head of RBI and what purpose he is serving to the government and to the nation. And please understand that what is good for government and what is good for nation need not always be the same thing. Neither what is good for the nation is always good for the government.

The problem with bureaucrats is that most of them do not have any individual standing or credibility to get an alternate reputable assignment. So most of them get lost post retirement or get vanished from public life. In fact most of them are simply a position without a name - like cabinet secretary, chief secretary, secretary-Home etc. So it is not surprising that only a handful few could stand up and say “No” if situation demands - others mostly fails to stand straight even. And our political system also force them to be spineless. A few who tries to stand up straight are generally thrown out of the system.

RBI Governor is not only a position but also a name. Though most incumbent forget that they have a name. Its people like Rajan, Urjit Patel and Viral Acharya are distinguished name apart from their position. Do you remember name of any other Dy Governor of RBI ? Or how many RBI Governor’s prior to Rajan we remember ? Its people like them who give distinct identity to the chair, they are not dependent on the chair for their existence. And to do so they have to be extremely competent in their chosen field.

I must congratulate Urjit Patel & Viral Acharya for holding their nerve and not making compromise . Though Patel gave in for demonetization after much deliberation. The current one would not hesitate to open all doors to let the government Rob off all its reserve.

To maintain a difference of opinion with the people in power or to say no to the government, first of all you have to have a sound logic / arguments in your favour and secondly you have to have clean background. Else you will get thrown behind the bar for some reason or other. No government would tolerate disgrace. The fact that all the above three are standing tall - speaks volumes of their credibility or the ground they were advocating.

In this article I am not going to elaborate details of performance or function of RBI governor on complex economic phenomena. This is particularly because of the fact that if anybody and everybody can be RBI governor without ever studding economics, then there is no point discussing their performance. I am rather feeling little sorry to bring all of them in one frame of my answer.Like even though Chandra Shekhar was one of India’s prime minster you wouldn’t compare him with Narendra Modi. Neither Modiji would ever liked to be compared with the likes of Chandra Shekhar.

Rajan the quintessential economist, who famously predicted the 2008 global financial meltdown as early as 2005.

I was still ready to go with the belief that there must be some stroke of brilliance or some God gifted genius in Mr. Das, making him the deserving candidate. But his following statement proved that I was hoping for the impossible.

The Reserve Bank of India(RBI) Governor Shaktikanta Das said on Monday, 16th September 2019 that India's gross domestic production (GDP) growth at 5 per cent came as a surprise and was much lower than anticipated.

"We (the RBI) predicted growth at 5.8 per cent. Nobody predicted less than 5.5 per cent. The number came as a surprise, worse than all predictions," the RBI Governor told news channel CNN News18.

A person sitting at the helm of economic affair, having access to all kind of statistics should have been able to identify the down ward trend well in advance, much before the general public get hint of it, rather than helplessly expressing surprise and being mute spectator.

Das was the economic affairs secretary in 2015-2017 and as a strong defender of demonetization. A move which has crippled the economy and he has been rewarded for his strong support for the same.

The efficiency and capability of an institution could be killed in two way. One is to interfere in its operation, more so when interference is made by the incompetent people. Secondly appointment of incompetent people to head the organisation.

With Mr Das as RBI Governor both condition are fulfilled. He is accepting unabated interference in RBI functioning from his masters ( who are equally incompetent ) and he himself absolutely incompetent. So no doubt the nation is suffering form the economic slowdown.

The RBI board - not the Governor - is the new boss at RBI; and Centre has a grip on the board

The RBI board meeting on November 19 at its Mint Road office in Mumbai, has set a new precedent for the functioning of RBI. In fact, the last two meetings - on October 23 and November 19 - are indicators that the board from now on will play a more active role in the workings of India's central bank.

The RBI board can have 21 directors - this includes governor, four deputy governors, two government nominees, four from RBI's regional boards and ten appointed by the government. However, unlike companies, the concept of the independent director does not exist in the RBI Act. The four deputy governors and two government nominees do not have voting rights; in the case of a tie, the governor has the casting vote. In RBI's history, no resolution has ever been put to vote. But now, the new set of directors backed by Centre are confident that if push comes to shove, they have a decent majority.

In august 2018 Swaminathan Gurumurthy, also known as Thuglaq Gurumurthy, is an RSS Ideologue was appointed as RBI board member. He was born to a Tamil Brahmin family at South Arcot District. He is also a journalist editing the Tamil political weekly Thuglak and a Chartered Accountant by profession. He is the co-convenor of the Swadeshi Jagaran Manch a RSS affiliate. He was a staunch critic of the erstwhile Governor Raghuram Rajan. RBI board member S Gurumurthy said Thursday ( 15th Nov 2018 )the economy would have collapsed but for the November 2016 demonetisation because high denomination notes of Rs 500 and Rs 1,000 were being used to purchase real estate and gold. No surprise he has been inducted on the board. It is reported that he was backed by PM & FM. He was accompanied by Satish Marathe, another RSS affiliate and corporate banker, Sachin Chaturvedi, a trade economist, and Manish Sabharwal of Teamlease; all of them have RSS backing

This has been a consistent policy of PM Modi-led regime, which pushes the independent directors at public sector enterprises to ask uncomfortable questions to the management. Now, it seems the same approach has been taken at the RBI too.

RBI data show central bank buys debt just as government sells it. The central bank reported 149.89 billion rupees ($2 billion) worth of sovereign debt purchases for April 16 2020, just one day after bills with the same value were mopped up by a few bids at an auction, according to data released on Friday.

In 2018, RBI has also publicly disclosed its dissent note on the government’s proposal to set up a Payment Regulatory Board, outside the RBI. Acharya cited this as another affront to the central bank’s standing. “Setting up parallel regulatory agencies with weaker statutory powers and/or encouraging development of unregulated (or lightly regulated) entities that perform financial intermediation functions outside the purview of the central bank’’ undermines its independence, said Acharya

RBI has also publicly disclosed its dissent RBI Issues Dissent Note Against Separate Payments Regulator note on the government’s proposal to set up a Payment Regulatory Board, outside the RBI. Acharya cited this as another affront to the central bank’s standing.

So one can see that there is very little room left for RBI governor to do anything of its own. And unless you have some one with credibility to head the organisation there is practically no room to expect much.

Ref:

1. GDP figures were worse than predicted, surprised us, says RBI Governor Shaktikanta Das
2. The board - not the Governor - is the new boss at RBI; and Centre has a grip on the board
3. Economy would have collapsed but for demonetisation: S Gurumurthy
4. RBI data show central bank buys debt just as government sells it
5. RBI’s Acharya Puts The Spotlight On Central Bank Independence
6. Government interference undermines RBI’s functional autonomy: Viral Acharya
7. RBI Issues Dissent Note Against Separate Payments Regulator