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Leave from Chicago University wasn’t an issue: Raghuram Rajan on RBI exit

People close to the government said Raghuram Rajan was offered a two-year extension at the RBI but the problem was his inability to get further extension of leave of absence from Chicago University.

india Updated: Sep 10, 2017 16:55 IST
Press Trust of India
Press Trust of India
Press Trust of India, New Delhi
Raghuram Rajan,RBI governor,RBI
Former Reserve Bank of India governor Raghuram Rajan reacts during the release of his book I Do what I do in New Delhi.(Mohd Zakir/HT PHOTO)

Raghuram Rajan dismissed reports that Chicago University’s refusal to extend his leave forced his departure from the RBI, saying it was never an issue and he wanted to stay longer at the central bank as governor to complete his mission to clean-up banks.

In an interview to PTI, Rajan said there was no proposal from the government to continue beyond his first 3-year tenure which ended on September 4 last year.

A former chief economist at the International Monetary Fund (IMF), Rajan, is the first governor since 1992 to not have got a five year term.

“I can refute that completely, that was not the issue. The university has been very good to me. They were happy to give as much leave (as I wanted),” he said.

Rajan said he did not “knock at the door” of the government to say he needed an extension but had “indicated a willingness to stay on” to address bad loans in the banking system.

“I had a three-year term. That was a contract I was given by the government. The three year contract came to an end. That’s it. Now I have another job,” he said.

Stating that he wanted to stay on at the RBI to complete the unfinished task of clean up of banks that he had initiated, Rajan said having initiated the AQR (asset quality review), he thought that it was important responsibility for him to carry out the entire clean up and not leave it unfinished.

“So that was primary reason that I was open but we didn’t get to a point where there was, as I said, a contract on the table,” he said.

After his exit created a furore, quarters close to the government stated that Rajan was offered a two-year extension but problem was his inability to get a further extension of leave of absence from the Chicago University without losing his valuable tenure.

Rajan, who was appointed to the RBI by the previous UPA government, had several run-ins with the government over difference in opinions.

Widely credited with having anticipated the 2008 global financial meltdown a couple of years ahead of it, the outspoken governor also spoke on social issues.

He had courted controversy in a 2015 lecture where he talked about growing intolerance in the country, deviating from his usual focus on monetary policy issues.


Asked if he felt bad about not getting the second term when his predecessors had got, he said: “I was focused on what had been accomplished and recognised that in my own personal sense much of what I wanted to do had been done.

“I would have liked some tasks completed, I would like to have seen this clean up through but if didn’t happen there are other people. There is a saying that cemeteries are full of indispensable people move on.”

At one point, BJP MP Subramanian Swamy accused him of being “mentally not fully Indian” and that his inflation centric monetary policy stifled growth.

Asked if he would want to comment on Swamy’s remarks against him, Rajan said, “No.”

“I think some issues that are better not (commented on). I think as soon as you start addressing these issues, you give it more weight than it deserves,” he said.

First Published: Sep 10, 2017 15:06 IST