Raghuram G. Rajan

20 Jun

” Dear Colleagues,

I took office in September 2013 as the 23rd Governor of the Reserve Bank of India. At that time, the currency was plunging daily, inflation was high, and growth was weak. India was then deemed one of the “Fragile Five”. In my opening statement as Governor, I laid out an agenda for action that I had discussed with you, including a new monetary framework that focused on bringing inflation down, raising of Foreign Currency Non-Resident (B) deposits to bolster our foreign exchange reserves, transparent licensing of new universal and niche banks by committees of unimpeachable integrity, creating new institutions such as the Bharat Bill Payment System and the Trade Receivables Exchange, expanding payments to all via mobile phones, and developing a large loan data base to better map and resolve the extent of system-wide distress. By implementing these measures, I said we would “build a bridge to the future, over the stormy waves produced by global financial markets”.

Today, I feel proud that we at the Reserve Bank have delivered on all these proposals. A new inflation-focused framework is in place that has helped halve inflation and allowed savers to earn positive real interest rates on deposits after a long time. We have also been able to cut interest rates by 150 basis points after raising them initially. This has reduced the nominal interest rate the government has to pay even while lengthening maturities it can issue – the government has been able to issue a 40 year bond for the first time. Finally, the currency stabilized after our actions, and our foreign exchange reserves are at a record high, even after we have fully provided for the outflow of foreign currency deposits we secured in 2013. Today, we are the fastest growing large economy in the world, having long exited the ranks of the Fragile Five.

We have done far more than was laid out in that initial statement, including helping the government reform the process of appointing Public Sector Bank management through the creation of the Bank Board Bureau (based on the recommendation of the RBI-appointed Nayak Committee), creating a whole set of new structures to allow banks to recover payments from failing projects, and forcing timely bank recognition of their unacknowledged bad debts and provisioning under the Asset Quality Review (AQR). We have worked on an enabling framework for National Payments Corporation of India to roll out the Universal Payment Interface, which will soon revolutionize mobile to mobile payments in the country. Internally, the RBI has gone through a restructuring and streamlining, designed and driven by our own senior staff. We are strengthening the specialization and skills of our employees so that they are second to none in the world. In everything we have done, we have been guided by the eminent public citizens on our Board such as Padma Vibhushan Dr. Anil Kakodkar, former Chairman of the Atomic Energy Commission and Padma Bhushan and Magsaysay award winner Ela Bhatt of the Self Employed Women’s Association. The integrity and capability of our people, and the transparency of our actions, is unparalleled, and I am proud to be a part of such a fine organization.

I am an academic and I have always made it clear that my ultimate home is in the realm of ideas. The approaching end of my three year term, and of my leave at the University of Chicago, was therefore a good time to reflect on how much we had accomplished. While all of what we laid out on that first day is done, two subsequent developments are yet to be completed. Inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed. Moreover, the bank clean up initiated under the Asset Quality Review, having already brought more credibility to bank balance sheets, is still ongoing. International developments also pose some risks in the short term.

While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016.  I will, of course, always be available to serve my country when needed.

Colleagues, we have worked with the government over the last three years to create a platform of macroeconomic and institutional stability. I am sure the work we have done will enable us to ride out imminent sources of market volatility like the threat of Brexit. We have made adequate preparations for the repayment of Foreign Currency Non-Resident (B) deposits and their outflow, managed properly, should largely be a non-event. Morale at the Bank is high because of your accomplishments.  I am sure the reforms the government is undertaking, together with what will be done by you and other regulators, will build on this platform and reflect in greater job growth and prosperity for our people in the years to come. I am confident my successor will take us to new heights with your help. I will still be working with you for the next couple of months, but let me thank all of you in the RBI family in advance for your dedicated work and unflinching support. It has been a fantastic journey together!

With gratitude

Yours sincerely

Raghuram G. Rajan ”

Source : https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=37259

I want to start with a confession in all my life never has a Central Bank Governor in India gained so much attention and for good reason. His performance has been exemplary more than that his courage to stand for autonomy of ideas and tolerance has been refreshing. As a student of life, one thought C. Rangarajan was perhaps India’s best Central Bank Governor. Raghuram Rajan has the same distinction. If a professional economist leaves a mark on public life. It’s remarkable. Ever since GFC ( Global Financial crisis) the role of central bank governors has been most important piece of economic policy. Infact many of the nations showed a modicum of growth only because of central bank governors intervention worldwide.  Central Bank Governors are very important. Raghuram Rajan as Governor of Reserve Bank of India has been a outstanding central bank governor. And a fine public intellectual. Remarkable man.

” We are losing one of the most skillful financial economic thinkers in the world. It is sad for the country and it is sad for the government of the country too. .” Said Nobel Laureate Amartya Sen. For more ” http://www.huffingtonpost.in/2016/06/18/raghuram-rajan-exit_n_10553282.html

I wish to share some ideas from a speech Governor Rajan made at National Institute of Bank Management Pune on April 20,2016:

A teachable moment

“To get to the experience, start first with where India is. India is the fastest growing large country in the world, though with manufacturing capacity utilisation low at 70% and agricultural growth slow following two bad monsoons, our potential is undoubtedly higher.

Growth, however, is just one measure of performance. The level of per capita GDP [Gross Domestic Product] is also important. We are still one of the poorest large countries in the world on a per capita basis, and have a long way to go before we reasonably address the concerns of each one of our citizens. We are often compared with China. But the Chinese economy, which was smaller than ours in the 1960s, is now five times our size at market exchange rates. The average Chinese citizen is over four times richer than the average Indian. The sobering thought is we have a long way to go before we can claim we have arrived.

As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest growing large economy. Our current growth certainly reflects the hard work of the government and the people of the country, but we have to repeat this performance for the next 20 years before we can give every Indian a decent livelihood. This is not to disparage what has, and is, been done. The central and state governments have been creating a platform for strong and sustainable growth, and I am confident the payoffs are on their way, but until we have stayed on this path for some time, I remain cautious.

We must remember that our international reputation is of a country with great promise, which has under-delivered in the past. This is why we are still the poorest country on a per capita basis among the BRICS [Brazil, Russia, India, China and South Africa]. We need to change perceptions by delivering steadily on our promise for a long time – by implementing, implementing, and implementing. We cannot get carried away by our current superiority in growth, for as soon as we believe in our own superiority and start distributing future wealth as if we already have it, we stop doing all that is required to continue growing. This movie has played too many times in India’s past for us to not know how it ends.”

Career advice

“But here is my promised career advice. Most of us are ambitious and have career goals in mind. We think we will be happy if we are successful – become CEO of a major multinational corporation; win the Nobel prize; become a mega movie star, and so on. And to achieve these goals we sometimes take jobs we dislike for we think the pain will be worth the eventual gain.

When we reason like this, I believe we have causality backwards. You are rarely happy simply because you are successful, but you are much more likely to be successful if you are happy, doing work you enjoy. Indeed, there are careful studies suggesting this. So when you choose what to do, don’t focus on the end point. Instead, focus on whether you like the work itself. Not only will you be more likely to reach your goal, even if you don’t arrive at that end point, you will have had a joyful life.”

Source: http://scroll.in/article/806940/full-text-raghuram-rajan-on-what-he-meant-by-in-the-land-of-the-blind-the-one-eyed-man-is-king

Think about this dear friends! If you do your work remarkably and give people something to think about. What more can one do…

A very Remarkable Raghuram G. Rajan. A Fine fine central bank governor, professor and public intellectual!

Hope you have a good day dear friends! Apologies for being away have been with my mother and working. Iam not sleeping well, must do something..

Love, Suresh

 

 

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