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The governor-designate of the RBI will have to rethink or temper many of his past positions that have been at variance with the central bank and the finance ministry

Expectations are running high about the Reserve Bank of India (RBI) governor-designate, Raghuram Rajan — unusually for an RBI governor, his appointment was not just reported by but also commented on editorially in the foreign press. Living up to these expectations will be a huge challenge for Dr. Rajan. It is bad enough that the Indian economy has to cope with falling growth, high inflation and an adverse external position. What makes things more difficult for him is that many of his past positions are at odds either with those of the finance ministry or the RBI or both.


Dr. Rajan needs to tread warily on three issues in particular. One, whether the RBI’s mandate should be confined to price stability or whether it needs to pursue other objectives as well, such as growth, currency stability and financial stability. Two, whether corporate houses should be granted bank licences and based on what criteria. Three, the role of the Financial Stability and Development Council (FSDC).

Begin with the mandate of the central bank. In its report in 2008, the Committee on Financial Sector Reforms (CFSR), that Dr. Rajan chaired, made its position clear. “This Committee feels that monetary policy should be reoriented towards focusing on a single objective, and there are good reasons why this objective should be price stability (defined as low and stable inflation). An exchange rate objective would limit policy options for domestic macroeconomic management and is not compatible with an increasingly open capital account.”

Army Chief VK Singh may Contest against Sonia Gandhi in Rae Bareli

Will it be General (Retired) VK Singh versus Sonia Gandhi in Rae Bareli in the 2014 Lok Sabha polls?

The former Army Chief has discussed the idea with top BJP leaders, who are “excited” at the thought of having a high voltage battle in the pocket borough of the Nehru-Gandhi family. “The former Army Chief was earlier interested in testing electoral waters from Bhiwani in Haryana, his home State. But, Singh realises that the Jat-dominated constituency may not be a winnable seat for Singh, a Thakur,” sources privy to the development told The Pioneer.

Rae Bareli and the neighbouring constituencies of Central UP have a sizable Thakur population. Sources said Singh, also believed his entry into politics would be grand if he took on the Congress chief in her den. Singh could not be contacted as he is in the US for the last two weeks. Singh met three top BJP leaders in the last couple of months to explore possibilities of  contesting from Rae Bareli on a BJP ticket. BJP leaders are also “positive” about his proposal, sources claimed adding, “The BJP would suitably accommodate Singh even if he lost the battle against Gandhi.” 

Singh is currently leading an anti-corruption campaign along with social activist Anna Hazare and is expected to visit Rae Bareli soon. Sources claimed Singh could lay bare his political intentions around October 11, the birth anniversary of legendry leader Jaiprakash Narayan who steered the most effective anti-Congress campaign in Indian history.

The Rae Bareli Parliamentary constituency consists of Bachhrawan (SC), Harchandpur, Rae Bareli, Sareni and Unchahar Assembly segments. As Congress candidate from Rae Bareli, Gandhi had polled over 4.80 lakh votes in the 2009 elections and her victory margin was over 3.72 lakhs. However, the Congress faced a humiliating defeat in the 2009 Assembly elections. It stood third in Bachhrawan, Rae Bareli, Sareni and Unchahar and second in Harchandpur Assembly segments.

The BJP candidate from Rae Bareli got just a little over 25,000 votes in the 2009 elections and the party feel the retired general would substantially reduce Gandhi’s victory margin. With Gujarat Chief Minister Narendra Modi taking centre stage and his trusted aide Amit Shah managing UP affairs for the party, BJP leaders hope Gandhi would face the toughest electoral battle of her political career in the next poll.  

Source: The Pioneer