Despite rising speculation on Reserve Bank of India (RBI) governor Raghuram Rajan getting a second term once his tenure ends in September this year, and his reported reluctance on getting an extension, the Prime Minister’s Office (PMO) is learnt to have approved his continuation for another three-year tenure.
The PMO is learnt to have cleared Dr Rajan’s name for a second term as RBI governor, sources told this newspaper on condition of anonymity. They further added that a notification on this is likely to be issued by the end of this month.
The development comes amid a raging debate on Dr Rajan’s future at the central bank once his tenure ends in September this year. He was appointed as RBI governor on September 4, 2013 by the UPA government.
It all started after BJP Rajya Sabha MP Subram-aniam Swamy’s criticised Dr Rajan’s policy decisions, which led to the corporate world coming out in favour of Dr Rajan getting a second tenure as RBI governor.
According to sources, there is a strong perception within the financial and corporate sectors that it was due to Dr Rajan’s measures that the country had been able to attract global investors, especially billions of dollars of foreign portfolio investment.
Mindful of the impact of his exit from RBI could have on the stock and money markets, the government is learnt to have decided to appoint Dr Rajan as the RBI governor for the second term, sources added.
In fact, it was learnt that Prime Minister Narendra Modi was keen to have Dr Rajan on board for another three-year tenure, despite the criticism from political quarters, especially from Dr Swamy, as the government may not like to disturb the current positive trend in the country’s economic growth.
On June 1, when there were reports in a section of the media that Dr Rajan was not keen on a second term and would like to pursue an academic career in the US, the rupee had fallen to a week’s low of 67.45 agai-nst the US dollar, which was a fall of 0.29 per cent over the previous week.
Even as developments related to his stay in RBI gather momentum, Dr Ra-jan is all set to announce on Tuesday (June 7) the second bi-monthly monetary policy review of the current financial year.
Expectations of a rate cut at RBI’s Tuesday policy review are lower after retail inflation rose to 5.39 per cent in April, which was above Dr Rajan’s near-term target of five per cent by March 2017.
