Swamy Wins, India Loses As Rajan Says Bye

Come September and we will have the 24th Governor at Mint Road.

On Saturday, one of the world's most respected economists Dr Raghuram Rajan who as governor-Reserve Bank of India (RBI) steered the country through one of its most troubled times decided to call it a day.

Rajan's chance of a second term as Governor had become a subject of intense speculation after BJP's maverick leader and Rajya Sabha member, Subramanian Swamy, raised objections over his policies. In the main that the incumbent had wrecked the economy by not softening interest rates.

Rajan who had all along been indifferent in public over the extension of his tenure as Governor did not make clear his reasons for not seeking one. But his statement posted on the RBI website does call attention to the recent controversy in a nuanced manner.

"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. I will, of course, always be available to serve my country when needed", he said. The giveaway line in bold tells you the needless controversy prompted Rajan to say bye.

Prime Minister Narendra Modi and Finance Minister Arun Jaitley will now be under the spotlight.

While the government can claim that it was Rajan who decided not to seek a second term, there will be few who will buy the party line. When the financial markets open on Monday, there will be a price to be paid even if things return to normal in a week or so. The government's credibility would have taken a hit and in the upcoming monsoon session of Parliament, it will find an echo. Whether the GST Bill will be the casualty is worth watching out for.

An unintended fallout is the new Governor -- for no fault -- will be seen as the Centre's "Yes person" at Mint Road. And it's unlikely the world will credit him or her with having a spine. That's unfortunate to say the very least.

At the end of the day, Swamy won, but India lost.