DR Manmohan Singh, architect of India's reforms, had once said that the Reserve Bank of India governor's job was the loneliest in India. If the good doctor C. Rangarajan were to assume charge at North Block now, he would have found this job lonelier still.
Being the finance minister in a BJP cabinet would have been all in a day's work for a man who had for the last five years strived, at his own pace, to create a separate identity for the apex bank, seen more as the government's private treasury since the days of Nehru than a regulator of money and credit flow in the economy. A close friend of Telugu Desam supremo Chandrababu Naidu, Rangarajan's name had been proposed by a south Indian section of the BJP and the cause was soon taken up by a section of the financial media. But the Andhra governor was less keen on a trade-off between politics and his first love, reading and writing.
Says Surjit Bhalla, member of the capital account convertibility committee: "Undoubtedly the most liberal, effective and modern technocratic governor, Rangarajan had three major successes: bringing down inflation expectations, interest rate deregulation and putting the rupee on the road to capital convertibility." A brilliant academic and a professor at IIM, Rangarajan brought into RBI the right blend of economic theory and pragmatism. Taking over in December 1992 right after the securities scam, he had a job even Manmohan Singh wouldn't have envied. As he himself said later: "I was a war-time general."
At the end of the war, he left the banking system healthier, the financial markets freer and public debt better managed. And, inflation down to the lowest in a decade and half, earning the nickname of India's Alan Greenspan (US Federal Reserve chairman). As he always said: "Low inflation keeps interest rates down, increases investor confidence, and helps prevent undue volatility in exchange rates. It is also the best anti-poverty programme." Of course, the rupee could still have gone up a bit. And the real interest rate was still high. But Rangarajan was interested in a certain pace and a definite goal. And few could have dictated to him.
As Lester Pereira, forex expert and member of commodity price risk hedging committee, said: "He would insist on having a free rein in determining policies. He wouldn't just be a rubber-stamp." At the end of the day, he'd have gone strictly by the book. More's the pity.