The Union government will name the next Governor of the Reserve Bank of India shortly, Finance Minister Arun Jaitley said on Saturday, hours after Raghuram Rajan unexpectedly made public his intention of returning to academia after the end of his term in September.
In a three-sentence message on social media websites, Mr. Jaitley said the government appreciated the “good work” done by Dr. Rajan and respected his decision.
No official statement was issued. The Prime Minister’s Office will make the announcement on Dr. Rajan’s successor next week, said a top Finance Ministry source.
Dr. Rajan’s announcement caught the government off-guard, a top government source said. “The government had no prior information on the letter from Dr. Rajan to RBI staff or his intentions … he seems to have made up his mind,” he said.
The source said the decision not to continue at the RBI was Dr. Rajan’s own and the government was yet to take a decision one way or the other.
Dr. Rajan’s letter indicates that he held consultations with the government, but does not specify if he informed it of his decision not to seek a second term.
An RBI source said Dr. Rajan’s decision follows heightened uncertainty over his second term: “The Governor was open to a second term and he had sought clarity on it from the government … at the highest level … but he received no response at all … the government did not even tell him that the daily attacks on him are unfair.”
Responding to a media query on Dr. Rajan’s reappointment, Prime Minister Narendra Modi last month said that it would come up only in September. “Why did Dr. Rajan have to make his intentions public in this manner … the Prime Minister cannot reveal his mind on an appointment six months in advance … the Governor’s post is not some haloed job … there are several high-profile appointments government makes,” the Ministry source said.
Economic Affairs Secretary Shaktikanta Das and NITI Aayog Vice-Chairman Arvind Panagariya had emerged as the front runners for the post, a source said.
>>The graphic - “Three years on Mint Road” – refers to a 25 bps repo rate cut to 7.25% corresponding to March 4, 2015. It is actually 7.5% . Corresponding to September 29, 2015, the graphic shows a 25 bps repo rate cut. It should have been 50 bps .