What is this fuss about ‘Rexit’?

Raghuram Rajan’s bombshell, in which he denied contesting for a second term as Reserve Bank of India’s (RBI) Governor, has created ripples across. Many in India Inc. are expressing disappointment over his early leave, whereas the opposite camp most notably including Subramanian Swamy has levelled serious allegations against Rajan. Who is being truthful? Does Rajan’s exit matter?

Rajan is a stellar economist who with some success managed market volatility and inflation crisis. He earned many supporters among the SBI Chief Arundhati Bhattacharya, chairman of HSBC Deepak Parekh and KaushikBasu, chief economist at World Bank. A former Chief Economist at the Finance Ministry said that Rajan was “so good that he was wasted on this government.” Sensex also crashed hearing ‘Rexit’.

Many academicians are crying foul over the lost autonomy of the RBI. Some feel that Rajan’s exit will give a leeway to crony capitalism.

Unfortunately, Rajan had not fared well in his relations with the Union government when he discussed ‘intolerance’ in the country and disagreed on the economic policy on various fronts. Congress questioned the timings of the government, which unveiled the ‘second generation reforms’ and further liberalised the economy within days of Rajan’s letter.

Subramanian Swamy and three Union Ministers started personal attacks on the RBI chief. Swamy bashed Rajan and called him responsible for “the collapse of industry and rise of unemployment.”

He had asked the Prime Minister to dismiss the RBI Governor as he is “mentally not fully Indian.” He accused Rajan of starving Small and Medium enterprises (SMEs) by keeping the interest rates high.  

Whether Rexit is desirable or not is not the question. There is no use fussing over the spilled milk. The volatile global economic scenario where the threat of ‘Brexit’ looms, the rise of Non-Performance Assets (NPAs) in the banking industry, fears over monsoon and inflation and expected outflow of $20 billion after FCNR exemption in September-November are the issues to watch out for. Rajan’s supporters and oppositions who do the country good by stop bickering over the issue and accept the outcome gracefully as the RBI chief himself has done.

Needless to say, Raghuram Rajan will always be remembered as one of the coolest and wittiest Rockstar RBI governors that India ever had. Wishing him even a grander success in his future plans of Academics.


Written by Rishya Dharmani
"Life is not a mystery, as they say, rather it is simplicity itself. Unlearn, fail and realize the true joy."