RBI chief Raghuram Rajan ribbed the media today for the array of reports on whether he will be re-appointed. "It would be cruel of me to spoil the fun the press is having," Mr Rajan said, adding that he is "intrigued by the letters I am supposed to have written." (Watch)
Last week, a report in a major regional newspaper said that Mr Rajan, 53, had written to Prime Minister Narendra Modi to say that he does not wish to remain at the central bank and would prefer to go back to the United States after his three-year term expires in early September.
Mr Rajan today said that the RBI's policy interest rate remains unchanged at a five-year low of 6.50 per cent, while signalling the prospect of another cut later this year if monsoon rains dampen upward pressure on food prices.
News agency Reuters has said that top government sources indicate Mr Rajan will be retained as RBI chief, should he wish to stay on. Mr Rajan has previously declined to say whether he would accept such a re-appointment saying it would be speculative to discuss.
Mr Rajan, a former University of Chicago professor, has been popular with foreign investors who have enthusiastically cheered him for his efforts to lower inflation and clean up state-run banks' massive bad loans.
But he has also attracted the opposition of some politicians and Finance Ministry officials for his reluctance to cut interest rates to stimulate growth.
"Rajan will get another term and he will accept it," said Arvind Mayaram, former Finance Secretary who Mr Rajan worked with closely first as the government's chief economic adviser and then as RBI governor. "He is well entrenched in India's political economy."
Government sources have made it clear that the decision rests with Prime Minister Narendra Modi and the leader has not yet said what he wants to do. Mr Modi recently did not indicate his leaning, telling The Wall Street Journal that Mr Rajan's reappointment would come up only in September.
BJP parliamentarian Subramanian Swamy, who has written two letters to PM Modi demanding Mr Rajan's removal, has accused him of "wilfully and deliberately wrecking the Indian economy." BJP leaders have said Mr Swamy's commentary is not the official party position.
Mr Rajan's appeal for tolerance late last year was perceived to be a veiled criticism of the government. He recently compared India's fast-growing economy to a "one-eyed king in the land of the blind". Trade Minister Nirmala Sitharaman publicly censured his comments.
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