Raghuram Rajan's inglorious exit shows Modi's weakness

The decision of Dr Raghuram Rajan to quit at the end of his tenure as the top honcho of the Reserve Bank of India can be interpreted in many ways. I am not one of the votaries to say that without Rajan at the helm the RBI would come to a grinding halt.

Indian economy is too big to be managed by a lone chief heading the nation’s central bank; but the RBI chief adds credibility to Modi’s growth story. And this is what Rajan did with his impeccable credentials by embarking on his own version of Swachh Bharat - cleaning up the banking mess. 

But India would definitely miss Rajan’s unique ability to read the macroeconomic indicators to forecast any looming doom. Dr Rajan gained global recognition when he foresaw the US economic downturn three years in advance, though it was pooh-poohed at that time.   

And probably this was the reason Dr Manmohan Singh brought him towards the fag end of his tenure as prime minister when the economy was on a free fall and the banks were on the brink of collapse.

So it is not going to be easy for Rajan’s successor to establish himself in his new job and convince the stakeholders that he can do better than Rajan. The Modi government could face its fall out in the coming months.  

But the way Dr Rajan’s decision to quit came about showed up the flaws in Prime Minister Narendra Modi’s leadership style. The singular lack of finesse in handling it reflected Modi’s inability or reluctance to defuse potentially embarrassing situations that reflect poor governance.

Is it a leadership flaw or does it reflect Modi’s difficulties in managing the BJP leadership, which seems to be bent upon creating more embarrassing situations for the prime minister? In fact, it seems to be providing the desperate Congress opposition more opportunities to flog the ruling party.

Some of the government appointees, probably chosen more for their loyalty to the party than ability, have brought more embarrassment than glory to both their jobs and the government with their lack of finesse in handling developing crises situations. 

We saw it in the Film and Television Institute and the Central Board of Film Certification. Probably we will be seeing it again in the National Institute of Fashion Technology (NIFT) following the appointment of Chetan Chauhan, a former test cricketer and two-time BJP MP as chairman.

This shows despite all the talk of national vision, BJP like the Congress, seems to be looking at all issues only in narrow political perspective.

As the prime minister, Modi has every right to decide upon the appointment of RBI governor. There is nothing wrong if he felt there was a need to replace Rajan at the end of his tenure because ultimately the buck stops on the PM’s table.

Modi, one of the most articulate leaders India ever had who is usually vociferous on many issues, kept mum when the one-man demolition army Subramanian Swamy demanded the sacking of Rajan and went to town questioning his integrity. So it would be logical to conclude that Modi probably wanted to replace Rajan.

But it is disappointing to see Modi not coming out in public against the character assassination of Rajan, who as the governor of the RBI was trying in his own way to realise the PM’s development narrative. 

Had Modi done so, it would have only added to his public esteem and credibility as a leader who stands by those who serve him in good faith.

The job of selecting the next RBI governor has been entrusted to a committee headed by the cabinet secretary. It is not clear whether it reflects the PM’s lack of confidence in decision making or spreading the responsibility for an important decision to his team?

Both are understandable as a PM cannot be an expert in every field to do the right thing every time. But to do so reflects the ability to discern critical issues. Does Modi consider the appointment of the right man as RBI governor as critical to his development story?

I remember a faux pas by another forceful and articulate PM: Indira Gandhi. She had difficulty in picking the grain from the chaff; her 20-point programme promoted with a lot of fanfare 40 years ago during Emergency is a prime example.

It was a snake oil salesman’s concoction based on the profound observation of Barnum (of the famous Ringling brothers circus Barnum and Bailey). He said: “There is a sucker born every minute”.

Indira Gandhi’s 20-point programme was to sell her socialist ways; it mixed the mundane with the absurd and included raising the income tax exemption limit to Rs 8000 from Rs 6,500, confiscation of properties of smugglers and steps to bring down prices of essential commodities.

At that time, the ministry of defence in its enthusiasm to promote the programme asked the Army to brief the soldiers about it every day. It reached ridiculous levels when as I as commanding officer had the thankless task of explaining the 20-point programme to my troops.

When I was having a tough time hemming and hawing on it in my bad Hindi, I was left speechless when a jawan asked me how any reduction of income tax or confiscating property of smugglers will affect him or his family living in rural Rajasthan.

Raghuram Rajan probably had little option than to quit after the loud silence from the government and BJP leadership when the media went to town with Swamy's serial fusillades against the RBI governor.

It was his honourable way of saying “thank you, enough is enough’’ to the Modi government. But his slightly inglorious exit shows that India and Modi still lack finesse in governance and in doing things gracefully.