New Government Must Respect Appointment of Rajan: Chidambaram

Reserve Bank of India chief Raghuram Rajan's appointment must be respected by any new government, Finance Minister P. Chidambaram said, backing the high-profile career economist amid speculation over his future in a Narendra Modi-led administration.

Strategists in Modi's Bharatiya Janata Party (BJP), which is widely expected to form the next government in New Delhi after ongoing national polls, had suggested that they would prefer to have one of their own at the helm of the country's central bank.

The party's treasurer, Piyush Goyal, had earlier been quoted by a newspaper as saying that Rajan's rate hikes had aggravated economic troubles in Asia's third-largest economy. Goyal, however, later said his party didn't have an agenda to remove the RBI chief.

Rajan has also received support from other BJP leaders, including former finance minister Yashwant Sinha, who has cautioned against subjecting the post of central bank governor to politics and has advocated maintaining the status quo.

"The governor has been appointed having regard to his outstanding record, his outstanding...reputation and his work earlier in other organisations," Chidambaram said on Thursday. "The next government must respect that appointment."

Rajan, a former International Monetary Fund chief economist, is hailed for predicting the global financial crisis in 2005. The ruling Congress party had appointed him to a three-year term last September.

The former University of Chicago professor is widely viewed as India's most capable technocrat, winning the respect of investors for his handling of a currency crisis that hit Asia's third-largest economy last year.

Since his appointment, Rajan has enjoyed an unusually smooth ride in a country where governments often blame the central bank for their own policy failings.

Copyright: Thomson Reuters 2014