Swamy bigger threat to Modi government than Rajan

With Subramanian Swamy firing on all cylinders against Reserve Bank of India (RBI) governor Raghuram Rajan, the Modi government's trouble is about to get worse.

Wait and watch. The projected gains of the BJP in Assam and the recent Assembly elections are going to be short-lived if Swamy's outbursts are not firmly checked by the government.

Not content with making noises in the public, Swamy has written a letter to the prime minister calling for Rajan's sacking.

Swamy says Rajan has made "wilful and apparently deliberate attempt" to wreck the Indian economy. Whether or not Rajan has "wrecked" the economy, Swamy is hell-bent on wrecking the government, and hence Modi from within.

Swamy's complaints against Rajan are that the interest rates are not coming down; bad loans have "doubled to 3.5 lakh crore in two years" and so on. Those are issues to be debated by economists. But more bizarrely, Swamy has written in the letter that Rajan "is in this country on a green card provided by the US government and therefore mentally not fully Indian". Swamy calls Rajan a wilful disrupter.

Only someone who is unacquainted with Swamy's modus operandi will ignore the maverick leader's fulminations against Rajan. A loose cannon but with a Machiavellian mind, Swamy chooses his targets carefully and goes about destroying their reputation methodically.

There is a much larger plan behind Swamy's campaign against Rajan. And Modi can't be unaware of this plan. Swamy, who claims that he can walk into the prime minister's office whenever he likes without prior appointment, won't be doing anything without Modi being in the know. Even in the normal course, Modi wouldn't be unaware of the game plan of a party member who has been at the forefront of running many a campaign on behalf of the BJP.

There could be two explanations on why Modi is putting up with the leader who was recently nominated to the Rajya Sabha. One reason could be that Modi is in the know of things and he has given Swamy a go ahead signal. The other reason could be that Modi is helpless. In both the cases, Modi is working to bring embarrassment upon himself and the government by not keeping Swamy in check. Because what Swamy is doing is not just about intra-party factional politics. He is wrecking the system from within.

The Modi government, in the last two years, has faced a lot of flak, has been taken to the cleaners on issues that have primarily been in the political domain. Among the few silver linings in the dark cloud hanging over Modi's reputation, one has been the government's performance on the economy front.

Even if Union finance minister Arun Jaitley and the RBI governor have not been on the same page, they have respected each other's institutional domain. Swamy is striking at this very root of institutional autonomy.

Rajan's term is about to end in September. He is open for a second term. But the government will have the liberty to extend his term or appoint a new governor. Why disrupt the working equilibrium? It's difficult to understand why there should be so much noise for the dismissal of the RBI governor at the fag end of his tenure.

Any government would be concerned about respecting and protecting an institutional arrangement and would clamp down on a ruling party member who seeks to bring the system into disrepute. Why is Modi letting Swamy put the RBI and Rajan's reputation on the line?

It seems Modi knows that Swamy has the backing of the Nagpur establishment. He has been rewarded with a Rajya Sabha seat for his no-holds-barred campaign against Congress leaders Sonia and Rahul Gandhi. The RSS and the BJP see Swamy as a lethal weapon and want to use him fully in attacking the Congress and in striking against the ideological core of Nehruvian policies.

Having found a seat in the Rajya Sabha, Swamy is now playing for bigger prize. As a trained economist, he has set his eyes on the finance ministry or one that is related to the economy. That can happen only if he upsets the existing arrangement. Swamy has also been attacking Jaitley and his performance in the finance ministry.

Importantly, Rajan is not his only target. Swamy has trained his guns on the chief economic advisor to the government of India, Arvind Subramanian, and on those who, according to him, are holders of green cards. Rajan, Subramanian and the Niti Aayog vice chairperson Arvind Panagariya are three US-based economists who are working in the Modi government. Barring Rajan who was appointed by the UPA government in 2013, Modi handpicked Subramanian and Panagariya.

In a government, which is already short on talent and experience, the three highly regarded economists with adequate international exposure provide the necessary edge to the economic policies. They are in sync with the global trends, which is so necessary in a globalised world.

Now that the term of Rajan is about to end, Swamy says, "I cannot see why someone appointed by the UPA government who is apparently working against Indian economic interests should be kept in this post when we have so many nationalist-minded experts available in this country for the RBI governorship."

It looks like Modi has bitten more than he could chew in nominating Swamy to the Rajya Sabha.

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