A review of Raghuram Rajan’s new book ‘I do what I do’
Words by: Rajesh Nair
Review of ‘I do what I do – On reforms, rhetoric and resolve’ – Raghuram Rajan
Amidst much hype and interest, Raghuram G. Rajan took charge as Governor of the Reserve Bank of India in September 2013.The economy was dubious, the rupee was in free fall, inflation was high, India had a large current account deficit and India’s exchange reserves were falling. A lot of measures had failed to stabilize markets, the punters and speculators alike had prophesied a moderate full-blown crisis and labelled India one of the Fragile Five economies.
Enter Raghuram Rajan. The media toasted his arrival and even the ‘Page 3’ bonhomie welcomed a suave, ‘good looking’ RBI governor. Kitsch columnist Shobha De went further and called him.. ‘one of the most desirable men in India’. His earlier book ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy’ had established him as an astute policy economist, who vehemently and unabashedly pointed out deep fractures in the economic policies of the ‘Wild West’ and predicted difficult times as early as 2005. His logic was outstanding and ability to knit various policies, draw connections and to predict the ‘fault lines’ even turned more eyeballs on him perhaps even more than Paul Krugman, the Economics Nobel Laureate. For those readers who were awestruck by this treatise, ‘I do what I do’ is a much watered down version and unlike what was expected and or rather gossiped – this is not a ‘tell-all tale’ which will fuel many a whisky banter among the intellectuals or business heads.
‘Fault lines’ was a classic of sorts. He picked up topics which were considered good economic thinking turned them on their head and took on various popular economic theories by the horn. He debated that the Wall Street’s compensation plans encouraged bankers to take big risks during the mortgage securitization boom. He also comes out with some interesting solutions which included suggesting that countries with mounting deficits should spend less and save more; countries with “trade surpluses” should encourage spending. For economic and environmental sustainability, the world’s population must lessen waste and practice conservation. Major exporting countries, such as China, should balance off the dependence on global demand, encourage domestic spending and import more.
The book is not about a big solution and a ‘what to do manual’. It is clearly a balanced account of his stint at the RBI strung together with a series of talks, essays and lectures he did during this stint. There is pragmatic caution in what he has written and stays away from anything controversial. Besides a few cursory remarks on demonetization, there is nothing incendiary in his comments and toes the line of a cautious economist. While he had the persona and the brand image perhaps more than the institution of the RBI, he categorically hails the value of teamwork the importance of the collective effort of the central bank which had long-term growth and stability on its agenda always.
Rajan’s initial days and much of his later days was to go all out, not just to tackle the crisis of confidence, but also to send a strong message about the strength of India’s institutions and the country’s ongoing programme of reform, more so when the government took over. He outlined a vision that went beyond the immediate crisis to focus on long-term growth and stability, thus restoring investor confidence. Boldness and farsightedness had been two aspects to many of the decisions he took in the ensuing three years, although he corrects our perception that it was not his decisions solely but that of the decision-making fabric of the RBI.
Image source: si.wsj.net
