Business Standard

How S Gurumurthy, an influential economic voice, is shaking up RBI

What neither side disputes is that Gurumurthy, who joined the central bank's board in August, is now one of the country's most influential economic voices

Independent directors may take decisions if Govt-RBI standoff continues

Reuters New Delhi
To his supporters, new Reserve Bank of India (RBI) board member Swaminathan Gurumurthy is a philosopher who will set India on a path of self-reliance. His detractors paint him as an ideologue who has pushed the government into a series of policy blunders.
What neither side disputes is that Gurumurthy, who joined the central bank's board in August, is now one of the country's most influential economic voices.
A chartered accountant and commentator who has long had the ear of leaders of the ruling Bharatiya Janata Party (BJP), Gurumurthy is a leading figure in the Rashtriya Swayamsevak Sangh, the parent organisation of the Hindu nationalist BJP where Prime minister Narendra Modi began his public career.
The former co-convener of the Swadeshi Jagran Manch, the economic wing of the RSS, has shaken up the central bank, say those who know him and are familiar with recent board meetings.
At both the October and November board meetings, Gurumurthy pressed members to do more for smaller enterprises, according to an official who has known him for more than three decades and is aware of the board discussions.
The bank's statement after its last policy meeting on Nov. 19 said it would "ease liquidity for the financial sector and increase credit to small businesses".
"He has his own ideas and he makes his points very forcefully," the official said.
Gurumurthy's appointment is being seen by Hindu nationalists as a major victory in its quest to rid the RBI and the government of "foreign" elements.
But his presence is also worrying investors and analysts, who fear for the RBI's independence.
Gurumurthy did not respond to requests for comment, but in a November speech - his first since joining the board - he said globalisation was now "irrelevant", praising U.S. President Donald Trump for his protectionist trade policies.
Hindu groups have cheered him for turning up the heat on RBI Governor Urjit Patel, who it was reported came close to resigning in November due to a rift between the bank and the finance ministry.
"We are very happy about it," said Ashwani Mahajan, who worked as Gurumurthy's fellow co-convener at the Manch, and who has known him for more than 25 years. "The board, which only used to be a rubber stamp, has started discussing these issues."
His call for public sector banks to loosen their lending requirements to small businesses closely aligns with the wishes of the government, which wants to keep India's economy running ahead of a key series of elections, despite a pile-up of bad debts at the banks.
Some investors worry the central bank's independence is being compromised in the process.
"It's not being viewed particularly positively," said Shilan Shah, an economist at Capital Economics in Singapore, which advises foreign funds. "He has been a pretty staunch critic of the RBI and he has got government interests at heart, which support growth before an election."
Randeep Surjewala, a spokesman of the opposition Congress - a party Gurumurthy has persistently clashed with - has said the appointment of a figure with such close links to the ruling party was a "disaster" for the RBI.
Many in the BJP have long seen Gurumurthy as one of the most influential economic thinkers on the Hindu right, said Paranjoy Guha Thakurta, a veteran journalist who has written extensively about Gurumurthy before he joined the RBI board.
"Modi listens to him," he said, noting Gurumurthy argued for removing high value banknotes from circulation months before Modi announced the shock move, known as demonetisation.
The policy initiative has been criticised by some economists as being ineffective at reining in the black economy.
In a speech last year Gurumurthy said the policy had been badly implemented, but this month argued the economy would have "collapsed" without it.
Born in the south Indian state of Tamil Nadu, Gurumurthy, 69, started his career as an accountant. While working for the firm auditing The Indian Express newspaper he grew close to its chairman, becoming a columnist for the paper.
He was arrested in 1987 in what he called a politically-motivated case, after turning against the then-ruling Congress party, bitter rivals of the current government.
In 2015, top members of the BJP, including president Amit Shah and finance minister Arun Jaitley, flew from Delhi to Chennai to attend the wedding of Gurumurthy's daughter, the Hindustan Times reported.
Gurumurthy's interests extend well beyond economics. He also edits a Tamil-language magazine, Thuglak, which often features satirical cartoons on its cover.
A devout Hindu, he considers himself a follower of Chandrashekarendra Saraswati, a deceased Tamil sage who Gurumurthy has said advised him to stay out of party politics.
In July, he delivered a speech at Samvad, a Hindu-Buddhist conclave designed, he said, to "shift the West-centric narrative into a world-centric and Asia-inclusive one".
"I find him a great thinker," said Mahajan. "Not only is he a great economist but he also has a grip of philosophy - what type (of society) we should have."
A prolific user of social media, he has called on his followers to be "open-minded" about using traditional Indian medicine to cure cancer, while urging Muslim Rohingya refugees to be deported to Myanmar.
He previously accused the Catholic Church in India of "anti-national activity", after an archbishop expressed concern about declining secularism in the country, and warned that Islam "cannot be moderated from within".
Here are a selection of his views on politics, economics and society, taken from speeches and social media posts.


"I reject not Western knowledge or tech, but embracing models that have not stood test of time and stand discredited.

We can't import Western anthropological modernity into Indian society."


"Colonisation lasted for 200 years. Now it's abused as one of the worst happenings in the history of world. It dominated the world, our minds, it left its imprint. Even today we suffer from hangovers of colonisation. The colonisers feel guilty about colonisation. But the colonised people are not feeling sad that they were colonised. They revel in things which colonisers left.

It is a paradoxical phenomenon."


"The Congress agenda is to make India a nation of minorities and castes, which is the best way to destroy the Indian society."


"The Indian economy could have collapsed if demonetisation hadn't happened. It was a corrective. Masses who used only cash for their daily lives massively support demonetisation.

Buccaneers using cash to push up asset prices to make a killing for themselves and killed the economy are hostile." 


"They should be sent back before they do what illegal Bangladeshi infiltrators did: take ration cards, driving licences."


"Confined to homes it is as good as any other religion. Once it goes into the streets, it is as violent as fascism and Nazism."


"Hinduism has the advantage of doctrinal tolerance. Islam and Christianity suffer from doctrinal intolerance."


"Trump was working with a plan and was correcting the distortions for America. See the results he produced: the dollar rose by 5.6per centt. Stocks rose by 38per centt in 22 months, a historic rate of return for America by any standards."


"Our financial, investment, trade partner must be Japan. But our mind is hooked to America."


"Raghuram Rajan destroyed the RBI's independence by making it subservient to global thought rather than pursue India-centric solutions. The RBI can't now move away from that line for fear of going against global financial opinion. RBI has lost its capacity to think for India."

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Nov 30 2018 | 12:03 PM IST

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