MUMBAI/NEW DELHI, June 18 - Buffeted by political attacks coupled with unending speculation over his continuance, RBI Governor Raghuram Rajan today said no to a second term in the post, a surprise decision the industry and opposition parties termed as nation�s loss.
Ruing that his work on containing inflation and cleaning up books of the banks was �yet to be completed,� Rajan said, �While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016.�
Speculation has been rife over whether Rajan, former IMF Chief Economist known to have predicted the 2008 global financial crisis, would get a second term after BJP leader Subramanian Swamy launched a no-holds-barred attack on him recently accusing him of destroying economy with his hawkish stance on interest rates.
Swamy had also questioned whether Rajan was �mentally, fully Indian� as he holds a US Green Card, among other allegations.
Rajan, who took charge as the 23rd RBI Governor in September 2013 with a three-year term, had also ruffled feathers in the saffron camp with his outspoken views on issues like intolerance and his remarks about India being �one-eyed king in the land of blind�.
While Finance Minister Arun Jaitley called for restraint in public criticism in the wake of Swamy�s attacks, BJP president Amit Shah said the newly-nominated MP�s remarks were his personal opinion.
Answering questions on another term for Rajan, Prime Minister Narendra Modi had said that this �administrative subject� should not be an issue of interest to the media and it �will come up only in September.�
In his letter to colleagues, 53-year-old Rajan, appointed by the previous UPA Government in September 2013, said he �will, of course, always be available to serve my country when needed.�
The decision of Rajan, who was called a rockstar central banker, immediately set off speculation about his successor and the impact it could have on stock and bond markets when they open on Monday morning.
Jaitley, who had earlier steadfastly refused to discuss in public the issue of a second term for Rajan, welcomed his decision saying he respects it and said the government appreciates his good work. A decision on the successor to Rajan would be announced shortly, he said.
Rajan has been generally hailed by the industry and experts, but has been under attack from some, including Swamy and a few other leaders for what they call his failure to contain inflation and lower interest rates to boost economy.
The Governor said he is confident that his successor would take the RBI to new heights.
�I am an academic and I have always made it clear that my ultimate home is in the realm of ideas. The approaching end of my three-year term, and of my leave at the University of Chicago, was therefore a good time to reflect on how much we had accomplished.
�While all of what we laid out on that first day is done, two subsequent developments are yet to be completed. Inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed.
�Moreover, the bank clean-up initiated under the Asset Quality Review, having already brought more credibility to bank balance sheets, is still ongoing. International developments also pose some risks in the short term,� he said.
At the end of his three-year tenure, Rajan would become the first RBI Governor since 1992 to have a term of less than five years. His predecessors � D Subbarao (2008-13), YV Reddy (2003-08), Bimal Jalan (1997-2003) and C Rangarajan (1992-97) � all had five-year (three plus two) terms or more. � PTI