How hacks malign Swamy II

The mainstream media and public intellectuals have suddenly realized many virtues in Reserve Bank of India Governor Raghuram Rajan. For years, he and his predecessors were slammed by a large section of opinion makers, editorialists, India Inc, etc., for dogmatically keeping interest rates up and getting obsessed with inflation. But now that Bharatiya Janata Party leader Subramanian Swamy has castigated him in no uncertain terms, all of them have woken up to the brilliance and perspicacity of the banking regulator.

Perhaps he is brilliant, but this has not helped check the exponential rise in bad loans during his tenure. In fact, commentators have noticed slackness in the regulatory remit of the central bank in this regard.

Rajan’s record in promoting Islamic banking (interest-free banking, a jihadist measure), is even more deplorable. In 2005, the RBI had constituted a committee under him to study the feasibility of introducing Islamic banking in the country. The committee said, “Another area that falls broadly in the ambit of financial infrastructure for inclusion is the provision of interest-free banking. Certain faiths prohibit the use of financial instruments that pay interest. The non-availability of interest-free banking products results in some Indians not being able to access banking products and services due to reasons of faith.”

Notice the disingenuousness—“certain faiths.” It is only Islam, or rather its most regressive versions, that is opposed to the concept of interest payment. Earlier, Christianity too was against to interest, but the faith has evolved; Islam hasn’t. Liberals like Rajan want to ensure that it doesn’t. They want to create an environment conducive for Islamic banking. State Bank of India even wanted to start a Shariat-compliant financial instrument.

It was because of the vigilantism of Swamy that Islamic banking made no progress in our country. Besides, he is a trained and eminent economist who has collaborated with legends like Paul Samuelson. Therefore, his remarks on Rajan cannot and should not be dismissed as the rants of a frustrated politician—which, by the way, is the constant refrain of the mainstream media.

We are told that terming Rajan as “mentally not fully Indian” is jingoistic, aimed at pleasing the Hindutva constituency, etc. This, however, is not the thrust of Swamy’s argument. In his letter to Prime Minister Narendra Modi, he wrote that he was “shocked at the willful and apparently deliberate attempt by Dr. Rajan to wreck the Indian economy.” Further, according to Swamy, “when the Wholesale Price Index (WPI) started to decline due to induced recession in the small and medium industry, he shifted the target from WPI to Consumer Price Index (CPI) which has not, however, declined because of retail prices. On the contrary, it has risen. Had Dr. Raghuram Rajan stuck to WPI, interest rates would have been much lower today, and given huge relief to small and medium industries. Instead, they are squeezed further and consequent increasing further unemployment.”

Swamy is not the first to have made this argument. In October 2014, Surjit Bhalla gave 10 reasons for the lowering of interest rates. Many other experts have also favored an easy money regime. The entire industry has been crying for rate cuts. And yet, at the peak of the Swamy vs. Rajan battle, when push came to shove, we were informed by The Economic Times (May 19) that nine out of 10 businessmen wanted Rajan to continue as RBI Governor!

A day before ET came up with its “survey,” it published an editorial in which it called Swamy’s suggestions to the Prime Minister as “load of rubbish.” The sister publication, The Times Of India, urged the government to “give RBI governor another term, ignore Subramanian Swamy’s pseudo-patriotism.”

Animus and agenda seem to be the guiding forces of the mainstream media.

  • Dr Swamy is highly knowledgeable and true patriot. His suggestions shouldn’t be ignored. He means good for the country.

  • Rajinder Verma

    If high interest rates are the only reason businesses are in the red then we have an issue with the RBI Governor. But frankly the Real Estate Sector is a bubble. And we are way to inefficient in the manufacturing sector. With 24×7 electricity the manufacturing lines must improve their bottomline. And then maybe interest rates no doubt could come down.

  • Chella Srinivasan

    Swamy is absolutely right

  • C S Gopalakrishnan

    I do not understand the micro or macro aspects of economy like perhaps 90% Indians don’t. But from the example of Mallya, I am apprehensive that lower interest rates may increase credit offtake leading to bad loans turning NPAs.
    Whiever is the next RBI governor should be able to put in place a policing mechanism to avoud such situations.
    Finally, I do not trust the capability of economists or economic planners to deliver anything but platitudes.

  • L D Shiggaon

    Media is the most important pillar of democracy and it should play the role of mirror to the society. Unfortunately these have become tools of political and antinatnal forces. Some have been aptly called as prestitutes. Very unfortunate indeed.

  • Amlan Rajat

    Had Swamy been so concerned, why didn’t he raise a voice then? Now, when Arun Jaitley is having a tiff with Mr. Rajan he raises his voice. And you talk about lowering interest rates and giving a relaxation to small and medium scale industries.. The current deficit that we face cannot be overcome with the government giving relaxation to people and industries everytime. There has to be atleast some source of solid revenues when only 1% of the working population in India is paying taxes. Do you understand the deficit burden that we bear?

  • Suriyanarayanan Iyer

    Basically Indian media is ante national and ante BJP!

  • M. B. Patel

    Subramanyam Swamy has hidden agenda. Nobody can understand why he is targeting RBI GOV. His fight is not against RBI GOV. Rajan personaly but it is for different purpose. To know it you should have deep knowledge of Indian politics and micro &macro obesrvation of happening in our country and should be able to read the mind of our politicians.Why he is pursuing selected issues for selected people and not on any principal ethics and morals.

  • Rajendra Karyakarte

    Inspite of the sluggish growth in majority of the Economies in the world , India hitherto has been maintaining good rate of GDP . However to propel the growth engine an impetus in the form fuel as easy finance was required . But due to the stubborn attitude of Mr. R.Rajan Governor Of RBI , Indian Economy is not able to takeoff , resulting in wait n watch situation by India Inc. Dr. Swamy is an eminent Economist who proved his mettle during Narasimha Rao’s regime by opening the Economy assisted by Dr.Manmohan Singh then FM. I m confident if Dr. Subramanian Swamy is given a cabinet rank as FM , India can become a vibrant Economy with GDP in the range of 10 to 12% . Its effects would be visible by way of higher FDI , higher employment. Let’s not forget India is the only country in the world with Highest Young population.