Raghuram Rajan on Urjit Patel: Former RBI governor red flags 'statement of protest'

Resignation of Urjit Patel from RBI governor's post has gone viral in India. The reason is the ongoing very public spat with the PM Narendra Modi led government over his unwillingness to cut repo rate or provide access to RBI reserves to the government. However, Prime Minister Narendra Modi took to his Twitter account, and called Urjit Patel a 'thorough professional with impeccable integrity'. Modi also stated that, Patel leaves behind a 'great legacy' and will be 'missed'. On the other hand, former governor Raghuram Rajan, who also decided to exit after being denied a second innings at RBI after differences emerged with government, in an exclusive interview raised a red flag for government and RBI's relationship ahead. In fact, Rajan called Patel's exit as a matter of concern. 

In an exclusive interview with Economic Times, Rajan said, "We need to ask what was the circumstances that led to Dr Patel resigning and the government must take extreme care in how it proceeds further in its relationship with the RBI. Wiser heads should prevail in the current environment and the circumstances that led to this resignation have to be reversed."

When asked about RBI's autonomy, Rajan mentioned that the act of resignation by a government servant or a regulator is really a note of protest. It is saying that the person cannot stay on given the kinds of policies that are being thrust upon them. 

On Patel, Rajan reportedly added, "This should be seen as a statement of protest and given that Dr Patel is very honourable civil servant in some sense and a regulator, I think we need to understand what prompted this act and I do not think Dr Patel is given to act in lightly. So, I think the government must note." 

Patel was one of the key candidates in line to become RBI governor after Rajan decided to exit from his post once his tenure ended in September 2016. Unlike

Rajan who was known for his outspokenness and virtually walked the talk, Patel was a silent governor whose actions spoke for him.

Patel was officially announced as RBI governor on August 20, 2016 and took his charge on September 04, 2016. 

In his resignation letter Patel said, "On account of personal reasons, I have decided to step down from my current position effective immediately. It has been my privilege and honor to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future."