Raghuram Rajan, who is admired by industry and is among the popular central bank chiefs globally, is the first RBI governor in more than two decades to not get a second term.
The government on Saturday named Deputy Governor Urjit Patel as his successor, an appointment hailed as a vote for continuity.
Rajan, in a surprising move on June 18, said he will step down on September 4, at the end of the three-year term.
A former chief economist at the International Monetary Fund (IMF), Rajan was appointed RBI Governor by the previous UPA government. He is currently on-leave professor at the Chicago Booth School of Business, and had on several occasions run into opinion difference with the government.
The outspoken governor soon became an eyesore for many, not only because of his views on economic reforms and independence of RBI, but also on social issues.
Rajan was under attack from BJP MP Subramanian Swamy for his inflation centric monetary policy. Swamy who had accused Rajan of being “mentally not fully Indian”, also said that it was because of his policies that growth has stifled.
The RBI Governor, however, allayed all such comments as mere “dialogues” and asked his critics to show how inflation is low.
“I am not sure where we are behind the curve. You have to tell me that somehow inflation is very low for us to be seen as behind the curve,” Rajan had said.
Earlier commenting on Rajan’s short tenure, a top finance ministry official had said that no individual can be bigger than an organisation.
Rajan will be the first Governor since 1992 to not have a five year term. His predecessors — D Subbarao (2008-2013), Y V Reddy (2003-2008), Bimal Jalan (1997-2003) and C Rangarajan (1992-1997) — had five-year terms.
After taking over in September 2013, he raised the short- term lending rate from 7.25 per cent to 8 per cent and retained the high rates throughout 2014 but began the process of lowering the rates in January 2015. He has since then cut them by 1.50 per cent to 6.50 per cent.
Governors who in RBI’s 71-year history have got an extension include Sir James Taylor, Sir CD Deshmukh, Sir Benegal Rama Rau, H V R Iyengar, P C Bhattacharya, S Jagannathan, Dr I G Patel, R N Malhotra, Dr C Rangarajan, Dr Bimal Jalan, Dr Y V Reddy and Dr D Subbbarao.
Sir CD Deshmukh was the first Indian to get an extension as RBI Governor. His two terms were spread over independent and non-independent India beginning from 1943 and ending in 1949.