With the shock retreat
from public office of the Reserve Bank of India chief comes the rise to
international prominence of long-time nemesis Subramanian Swamy, a nationalist
named to the upper house of parliament in April by the country's ruling party.
Swamy,
a Harvard-educated economist, has a track record of criticising Raghuram Rajan,
whose decision on Saturday to step down as Reserve Bank of India (RBI) governor
when his term ends in September rattled government officials and foreign
investors.
Even before
Prime Minister Narendra Modi swept to power in 2014, Swamy was agitating for
Rajan's removal.
"We
can make it worthwhile for him to leave," he told Reuters at the time.
The
campaign gathered intensity since Swamy's promotion to the Rajya Sabha upper
chamber, and his language has mirrored that of the Rashtriya Swayamsevak Sangh
(RSS), the right-wing Hindu ideological parent of the ruling Bharatiya Janata
Party.
Modi
had thrown his support behind Rajan, describing him as the "best
teacher" for explaining economic issues and telling a meeting of finance
ministry officials not to publicly question the RBI.
That
Rajan is now headed for the exit underlines both Swamy's mettle as a political
antagonist and the balance Modi must strike between modernizing India's economy
and appeasing his nationalist vote bank that leans towards protectionism.
Swamy,
renowned for sometimes fiery campaigns against those who raise his ire,
declined to speak to Reuters when approached at his home, or to answer text
messages, since Rajan made his announcement.
He did
speak to ANI, a partner of Reuters Television, saying that "if he (Rajan)
says that he wants to go and he wants to save his self-respect I have no
problem. Let him pretend that he is giving up and going. But as long as he
goes, it is good."
RSS
GAMBIT
The
RSS, an organisation that works mostly behind the scenes but which preaches
self-sufficiency and is suspicious of foreign influence, has made no secret of
its desire to unseat Rajan, a former chief economist at the International
Monetary Fund now on leave from his professorship at the University of Chicago.
During
a meeting with aides and the RSS earlier this year, Modi said that Swamy, who
is on the Bharatiya Janata Party's (BJP) national executive committee, should
be kept out of government, according to two people who attended.
The
RSS suggested that Swamy be given a spot in the Rajya Sabha, said a senior RSS
leader who attended the meeting, and Modi relented.
Less
than a month after gaining his berth in parliament, Swamy wrote an open letter
to Modi that questioned Rajan's loyalty to India as a holder of an American
green card.
He
accused the governor of an "apparently deliberate attempt" to
"wreck the Indian economy." It was "in the national
interest" to fire Rajan, Swamy wrote.
Swamy's
own contradictions are not uncommon in Indian politics. He holds a doctorate in
economics from Harvard and has lambasted others for their Western backgrounds,
and gives frequent media interviews yet voices disdain for the press.
He
does not shy from self-promotion, having long proclaimed his suitability to
serve as India's finance minister.
Swamy
also appears to relish a fight, including taking on the Gandhi political
dynasty and pushing for the construction of a Hindu temple at a disputed site.
On his Twitter profile he notes: "I give as good as I get."
"RIGHT
TO LEAVE"
His
letter to Modi repeated a longstanding RSS complaint that by keeping interest
rates relatively high, Rajan squeezed small- and medium-sized firms, mainstays
of the organization.
Also,
in the RSS' view, by launching an aggressive campaign to clean up banks'
non-performing assets, Rajan further discouraged new loans to Indian
businessmen, said an India-based banker who recently attended a program hosted
by the group.
"Rajan
made the right decision to leave, because he was not in synch with the Indian
economy," S. Gurumurthy, a senior member of the RSS' economic wing, told
Reuters.
"India
does not need a celebrity or a popular economist, we need someone who can keep
his head down and work. We need an economist who has witnessed rural
distress."
Rajan
has not given a full explanation for his decision to step down, but on Monday
defended his actions at the RBI.
While
he has plenty of critics at home, Rajan is a favourite among foreign investors
and has been credited for bringing inflation under control.
A
person who worked closely with Rajan pointed to Swamy's words and the
government's failure to push back publicly as a tipping point for the governor.
"He
had cordial enough relations with the top leadership in the government,"
said the person, who asked not to be named because of the sensitivity of the
issue.
"But
these attacks by Swamy were too personal, and no self-respecting person can
take that."
On
Monday, with news of Rajan's departure still resonating, Modi took to social
media to announce a series of reforms allowing more foreign direct investment
in aviation, defence and retail.
The
changes came with a message from Modi: he was making "India the most open
economy in the world."
Representative
Image
Source: Reuters
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