FM: Decision on successor soon

In his letter, Rajan has said that the decision to leave was taken after consultation with the government

Hours after Reserve Bank of India (RBI) Governor Raghuram Rajan’s announcement, Union Finance Minister Arun Jaitley said the government respected his decision and a successor would be chosen soon.

“Dr Raghuram Rajan has announced his intention to go back to academics at the end of his current assignment. The government appreciates the good work done by him and respects his decision. A decision on his successor would be announced shortly,” Jaitley said on his official Facebook page on Saturday evening.

In his letter to RBI employees on Saturday, Rajan said he had taken the decision after consultation with the government. In this case, “government” most likely means Jaitley and Prime Minister Narendra Modi.

The PM and the FM have traditionally had the final say in matters regarding the central bank chief’s appointment.

The revelation was not welcome to everyone.

Jaitley’s predecessor, former finance minister P Chidambaram said he was “disappointed and saddened” by the RBI governor’s decision.

“I hasten to add that I’m not surprised at all. As I had said, this government didn’t deserve Dr Rajan. Nevertheless, India is the loser,” Chidambaram was quoted as saying by news agency ANI.

Chidambaram was the Finance Minister when Rajan was appointed Chief Economic Advisor in August 2012 and when he was made the RBI governor in September 2013.

“Raghuram Rajan’s decision not to seek second term would be very costly for the economy. Not a good omen,” tweeted former finance secretary Arvind Mayaram, who was the economic affairs secretary during Rajan’s tenure in the North Block.

“He has been one of the finest central bank governors anywhere,” tweeted World Bank Chief Economist Kaushik Basu.

Basu was Rajan’s predecessor as India’s chief economic advisor.
 
When Business Standard reached out to serving policymakers and bureaucrats for their comments, most declined to react but some admitted the development had came as a surprise and that they had no inkling that Rajan would issue such a statement. This is an indicator of the fact that whatever discussions took place regarding the matter were between the PM, FM, and the governor. WHO SAID WHAT

“Dr Rajan is a person of very high calibre, who has built ably on the reputation of our central bank and given it a very large measure of credibility.”
Arundhati Bhattacharya, Chairman, SBI

“I am disappointed and profoundly saddened by the decision, but I hasten to add that I am not surprised at all”
P Chidambaram, Former finance minister

“It’s a pity to lose him. I’m wondering what has precipitated this action. I am sure the government would have considered giving him another two years term”
Deepak Parekh, chairman, HDFC