UPA never hounded out its RBI chiefs: Chidambaram

We did not abuse RBI governors. We did not let loose people to abuse them and we never forced them to say that they will not seek a second term," says former finance minister

Taking a jibe at the way the Narendra Modi government handled the vicious criticism of Reserve Bank of India (RBI) Governor Raghuram Rajan by a member of the ruling Bharatiya Janata Party (BJP), former finance minister P Chidambaram said that despite differences, the United Progressive Alliance (UPA) government never hounded out central bank chiefs.

“We did not abuse RBI governors. We did not let loose people to abuse them and we never forced them to say that they will not seek a second term,” Chidambaram told television presenter Karan Thapar on his show To the Point aired on Wednesday.

In June, Rajan had said he would return to academia after his term ends on September 4. He said the decision had been taken in consultation with the academia. BJP’s firebrand Rajya Sabha MP Subramanian Swamy had, for days leading up to the announcement, led a sustained, bitter, and vitriolic attack on Rajan. The incident ended up showing the government in a bad light. Speaking on the differences between the finance ministry and RBI as mentioned by former RBI governor Duvvuri Subbarao in his memoirs Who Moved My Interest Rate?, Chidambaram said that eight out of 10 times, the UPA government supported the central bank’s monetary policy stance, repeating a statement he had made earlier.

In his book, Subbarao says while that might be the finance minister's experience, it was not his. "I found that all through my tenure, the government was distinctly uncomfortable with the RBI raising interest rates and seemed convinced that monetary policy was choking growth." The lingering hurt has perhaps prompted the former governor to say that "the logic of why the Reserve Bank should compromise its judgment so as to become a cheerleader for the economy never appealed to me". Subbarao has written that the government did not extend the tenure of deputy governors Usha Thorat and Subir Gokarn in spite of his recommendations. According to him, that was the “price we had to pay for asserting the autonomy of the Reserve Bank of India”.

To this, Chidambaram responded: “It is the government’s prerogative whether to give a deputy governor a second term or not. What he (Subbarao) did not mention was that we gave an extension to deputy governor H R Khan based on his recommendation.”

In Gokarn’s case, we felt that it was time to bring in a new face and we brought in Urjit Patel. Can anyone question Patel’s credibility?”

Chidambaram also said that he believed in absolute free speech and Subbarao was free to write whatever he wanted to. Notably, the book itself carries a testimonial by Chidambaram.

“He asked me if I would write an endorsement for the book. I said of course I would. I was unaware of what he had written. I was given a manuscript which I read. He has the full right to say what he said.”