Perhaps because the Modi government had some differences of opinion with two of the economist governors (one of whom was appointed by the Manmohan Singh government), there is a view that its political leadership prefers a civil servant to head the RBI, notes A K Bhattacharya.
A top Finance Ministry source, however, said no discussion has taken place in the government so far on whether to extend Rajan's tenure or not.
In his new role, Subbarao will take part in various activities at NUS Business School, the Institute of South Asian Studies and the Monetary Authority of Singapore.
'The prime minister's comment on 'revdi culture' was welcome. But I am disappointed he did not follow up on that.' 'All political parties, including the BJP, have been guilty of this.' 'Now, Modi's guarantees, the Congress's 'nyay' path and both ruling and Opposition parties are vying with each other for freebies in my home state Andhra Pradesh.'
Rajan will evolve a policy with the help of professional persons for a national consensus if we have to carry on with implementing social and economic changes in a complex economy.
The friction with the political class is not only about interest rates and monetary policy. While the government often spoke freely about its discomfiture, the RBI had to be careful even in its response to the government as any loose statement would affect the markets.
"We did not abuse RBI governors," says Chidambaram.
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The RBI has bought Rs 124.62 billion worth of bonds since its announcement on Aug. 20 that it would occasionally buy bonds to relieve some of the cash tightness in the banking system.
Rajan's appointment will be perceived as a positive development.
The currency fell 3.4 per cent this week, and is below the levels at which it was trading on July 15 when the Reserve Bank of India unveiled its cash tightening steps to defend the currency.
The RBI stipulated on Thursday that foreign institutional investors would require a mandate from participatory note holders to hedge on their behalf.
Tension between the government, specially the finance ministry, and RBI is as old as the central bank itself.
'The pitch for India is flat, the ball for India is old, the sun for India is out, and the bowlers are not bowling too well.' 'I think only we can get ourselves out.'
Jaitley has made it a habit of giving soundbytes to the media like his predecessors on why RBI should cut interest rates
As inflation rate is near the upper limit of the comfort zone, experts rule out rate cuts anytime soon
Duvvuri Subbarao recounts how his tensions with P Chidambaram and Pranab Mukherjee, then finance ministers, over monetary policy spilled over into other issues in the central bank in this excerpt from Who Moved My Interest Rate?, his memoir of his term as Reserve Bank of India governor.
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Policymakers stepped in late Thursday to calm markets.
With RBI governor Duvvuri Subbarao retiring in September, 2013, the government is on the look out for the most eligible person to head the Reserve Bank of India.
The 30-share Sensex ended down 90 points at 19,429 after hitting an intra-day low of 19,398 and the 50-share Nifty ended down 40 points at 5,881 after touching an intra-day low of 5,871.
There is also a lobby within the bureaucracy that wants to see Rajan's influence curtailed
As the global economy sways into uncertain territories and domestic prices almost certain to rise, Raghuram Rajan's ideas would have come in handy.
Raghuram Rajan remains focused on a long-term inflation target of 4 percent.
The RBI expects inflation in 2015 to hover around 6 per cent -- its target for January 2016 -- and sees risks to the target evenly balanced.
The RBI has shelved its plan for polymer notes more than a decade after it invited interest from global manufacturers for one billion pieces of Rs 10 denomination polymer banknotes, reveals Tamal Bandyopadhyay.
T C A Srinivasa-Raghavan recalls a tussle between the government and RBI when Rajiv Gandhi was prime minister and how it was resolved.
Bukkapuram Nadella Yugandhar's 'formidable legacy will survive through a generation of civil servants whom he trained, nurtured, mentored and inspired with a rare combination of energy, enthusiasm and passion,' says former RBI govenor Dr Duvvuri Subbarao.
The speed at which he led the central bank in different areas -- ranging from internal reorganisation to inflation fighting, stabilising the currency, taking on rogue corporations, cleaning up bank balance sheets, and opening the sector -- makes one believe that Rajan knew he had only three years to do his job. A fascinating excerpt from Tamal Bandyopadhyay's MUST-READ Roller Coaster: An Affair with Banking.
Interview with former Reserve Bank of India governor by Duvvuri Subbarao.
It is important to understand that debt investors are a conservative lot and, in general, most such investments are hedged out of foreign exchange risk to simply earn an arbitrage profit, rather than carry the risk to possibly increase their yield.
Policymakers have been grappling with high prices for food staples such as onions and potatoes even after the central bank raised interest rates by a quarter percentage point in each of its previous two reviews.
The Reserve Bank of India is not a free agent. It never has been, nor should it ever be.
If the new governor can think out of the box even as he signals that he can bat for the RBI cadre and respect its institutional memory, that will go a long way in getting out of the current impasse.
The principal challenge for Rajan's successor is to work with the Bank Board Bureau and the finance ministry to complete these processes of banking reform.
Are we adopting an idea whose time has come and gone? My feeling is, yes, says ex-banker C Joseph Chacko in the fourth article of the series on inflation targeting.
Tamal Bandyopadhyay discusses his latest book Bandhan: The Making of a Bank at Bandhan headquarters in Kolkata.
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