India’s globally and domestically celebrated central bank governor Raghuram Rajan is considered by many as India’s top reformist. It was by his attempt, Indian banks were forced to disclose their true NPAs (non-performing assets) and turn their heads to recovery. This has upset many as Indian banks chase after willful defaulters such as Vijay Mallya, known as India’s “Liquor Barron” and “King of good times”. He is one of many businessmen being considered as willful defaulters.
While international investors have warmed up to Raghuram Rajan’s inflation targeting policies, many domestic business house complain that he hasn’t reduced rates enough to promote growth, despite the fact that RBI is pursuing easing policy now. He has taken relatively cautious approach towards interest rates and foreign currency loans as U.S. Federal reserve prepares for a rate hike.
Subramanian Swamy, 77 year old Harvard educated economist and a prominent member of Bharatiya Janata Party (BJP) has launched attack against reappointment of the governor, whose first three year term ends in September. He accused Mr. Rajan for not being mentally Indian, since his green card permits him to live and work in United States.
This is more of a repercussion for not lowering rates faster, pushing banks to chase after defaulter billionaires with close ties with government and his call for tolerance of diverse opinions last year, which were interpreted as thin-veiled attack on hardliners in BJP government. Moreover his recent remarks at International Monetary Fund and World Bank meeting regarding India as bright spot in weakening world economy – “in the land of the blind, the one-eyed man is king” has annoyed many in BJP government.
Government however, officially maintained its silence over the matter except saying that the decision over central bank governor issue will be announced in August.
Until then investors will keep living in palpitation.
The material has been provided by InstaForex Company – www.instaforex.com