The tragic lack of trust between the Government and the Reserve Bank of India (RBI) has come into open. It is latest in line with the government’s inefficiency in dealing with things. The RBI is an autonomous institution, which keeps a watch on inflation and health of our currency, apart from being a regulatory authority for public and private sector banks. Initially when the economy was small, the governor of the bank was important. He worked in close coordination with the finance minister. The importance of the market increased after opening up of the market for private sector in 1991, which also caused increase in GDP and financial data. Now, how efficiently they deal with these matters depends upon the capabilities and skills of the finance minister and the governor of RBI. Before the current incumbent, P. Chidambaram was the finance minister and he was a bit inflexible in his working style – some called him egoist. His relationship with the then governor D. Subbarao Sahib was far from cordial. However, his tuning with Raghuram Rajan was good.
When the current government came to power and Arun Jaitley become finance minister, Raghuram Rajan was the governor of RBI. Rajan is a man of the Chicago Consensus. His thinking was different. I do not think the economist who studied in the United States is a smarter economist than the one who has studied in India. India is a country of 1.25 billion people, whereas the US population is somewhere around 200 to 300 million. They cannot tell us how to manage our economy. Indeed the US is a super rich country, but they do not give their money to us, then why would they tell us what we should do. If a person with American mindset comes to our country, he will work for America's interest. Take for example import-export policy. Every country wants its goods to be sold. The US also wants more and more goods to be sold in India. In arms sector they have edge because of their superior technology. They want Indians to import even those smaller things that can be manufactured easily at home. Now enters China, to give a tough day to the US. China inundated the Indian market with mobile phones that could have been easily manufactured in India. This government has a lot of love for China and Japan, but is afraid of the US. In fact only a man with spine should lead India. If you stand up from the chair on getting a telephone call from Trump, then you are incapable of leading the country. On the occasion of the Republic Day parade, the government wanted to invite Mr. Trump, but he rejected the invitation, maybe he thought that Modi ji is a fading star, not the rising one. Why should he add his name with Modi? The person who will become the next prime minister he will engage with him. Every country keeps its interests first, and there is nothing wrong in it.