A look back at Dr Raghuram Rajan's lost passage to India

Raghuram Rajan is the most brilliant central bank governor to serve India's 1.2 billion people.

It is dangerous to speak truth to power in a time of cholera. It is dangerous to tell the truth, to call billionaire oligarchs who have looted state owned banks "crooked", to call the Maharajah's political courtiers "venal", to criticise religious intolerance when a lifelong RSS zealot is the Indian prime minister.

So Raghuram Rajan, the most brilliant central bank governor to serve India's 1.2 billion people, obviously had to go. Billionaire oligarchs and the RSS' brown shorts, stick-wielding ideologues are the real kingmakers in Modi's India seven decades after an RSS assassin gunned down Mahatma Gandhi.

Raghu, as he once asked me to call him the only time we met at a New York conference in 1999, stabilised the Indian rupee, slashed inflation and the repo rate, saved India a sovereign credit downgrade, restored monetary credibility with the offshore fund managers who bankroll its 7.6 per cent GDP growth rate, was the most-respected Asian central banker at the IMF, the World Bank, the Fed, the Bank of England, the political chancelleries of the world.
But a bigot BJP lawmaker, a non-entity who lost his teaching job at Harvard for his communal, extremist poison, branded him "not mentally fully Indian". This would be hilarious if it were not so tragic that a peanut-brained intellectual joke dares to judge Raghu, who I am almost certain will win the first Noble Prize in economics for India since Cambridge's Dr Amartya Sen.

This world-class economist, a gift from the gods to India and my professional dismal science tribe, was not given a term extension while his predecessor, whose money-printing cost Indians a 50 per cent free-fall in the rupee and who inflicted the draconian regressive tax of double-digit inflation on 500 million poor Indians, served a full five years.

Raghu, a man hailed as a genius by the cognoscenti of Wall Street, Liverpool Street and, yes, Dalal Street, is sacked by the prime minister while men who have plundered India's public banks and inflamed religious intolerance grace the inner sanctums of the BJP. This is wrong. This is shameful. This is unreal. This will haunt India for decades after Modinomics is exposed as nothing remotely similar to the Reagan/Thatcher economic revolutions that embraced the free market and rolled back the state in the 1980s. But, friends, Romans, I publish this column to bury Dr Rajan, not to praise him.

Raghu returns to the realm of ideas in Chicago where he is happiest. I do not blame him. A man who refuses to toady up to the political masters as RBI governor is anathema to both Congress and the BJP's imperious imperial court. Arun Jaitley is a loyalist and a lawyer, not even an economist but he and not Arun Shourie is the finance minister. Men who value ideas and beauty do not crave petty power or black money slush funds in a Swiss private bank. Raghu should have heeded the advice of Lord Tennyson and the lesson of the Light Brigade. Ours is not to reason why; ours is but to do and die. We need meek, timid, compliant yes men at the RBI who do not call oligarchs and banksters "crooked", who do not brand the Netaji Crooks R Us Brigade "venal", who do not evoke the memory of the Nuremberg Laws (strange, I will be in Nuremberg next week!) in New Delhi 2016. We need men who can bat and ball, hail Caesar on command, dutifully scream yes sir, no sir, three bags full sir (sirji, in Pakistan, in the court of King Assi Tussi!).

Modi should really appoint another Tamil to be governor of the RBI. Dr Subramanian Swami would be an ideal Indian ambassador to Wall Street. Rekha would be even better, a lady of grace and beauty even greater than Swami's. It does not matter who is the next governor of the RBI because now we know why they get the job.

My Indian friends tell me Dr Rajan's sacking in a storm in a teacup, that he was no jewel in India's crown, that it is rude to expose Emperors who wear no loincloths. I passionately disagree. As an investor in emerging markets, I live and die by the Latin world credere - belief. Without credere, there is no credit. So Modi and Jaitley have gravely damaged India's sovereign risk and raised the risk premium for inflation, G-Sec issuances and the rupee. Yet this is far less important than the BJP's power of politics and patronage - the Congress was no different, only far sleazier.
The next RBI governor will have to curry favour at the court of the BJP princes, not insist that India's powerless be defined in the image of the powerful, as they have been for all these centuries. I hope to shake Raghuram Rajan's hand for the second time in my life. Raghu, you are my hero. India will never forget you.
- The writer is a global equities strategist and fund manager. Views expressed are his own and do not reflect the newspaper's policies.