I do what I do – Raghuram G Rajan

excerpts on recently published book, I do what I do from ex. RBI governor, Raghuram Rajan

Indian public seldom recognises the importance of regulatory institutions like Election Commission, CAG, and RBI etc. These institutions have made significant contributions over the years in ensuring check and balances, which helped a poor & emerging nation to not to fall into chaos like its other South Asian neighbours. During the life of these institution, sometimes they find a leader who led them into public imagination. It’s not as if predecessors had capability issues, they all have made huge contribution to these institutions but mostly worked away from public limelight. What T N Seshan and Vinod Rai did for election commission and CAG respectively; Raghuram G Rajan did for RBI. And therefore any book from him was eagerly awaited.

True to his word on not writing or speaking on his RBI experience for one year post RBI, He released his first book in Sep’17 aptly titled I do what I do. Before I summarises what this book is all about, let me tell you what it isn’t?

This book is not his biography or memoirs during RBI days and hence if you are expecting post retirement dirt on politicians; I’m afraid there is none. So avoid if that’s what all you are interested. But if you are interested in understanding his thoughts on various RBI policies, his views on India’s economic particularly financial sector, his thoughts on world finance, please read “I do what I do”.

This book is collection of lectures and speeches delivered during his tenure as RBI governor, Non RBI days and as IMF chief economist. His resume is exceptional. Not only because he was the one to predict global financial meltdown of 2008 in 2005 (one chapter is on his 2005 Jackson hole speech) but his career as youngest chief economist of IMF, Vice Chairman on board of BIS and Central Bank governor of the fastest emerging nation besides being professor of finance at the University of Chicago. His speeches do reflect this diverse experience and the talent of being teacher, economist, researcher and administrator. As he clarifies all these speeches are written by him (and hence not works of his support staff) and curated as well by him for this book. Instead of putting these speeches chronically, its bundles around theme say Inflation. So all speeches where he has shared his thoughts on Inflation (including the famous dosanomics) is clubbed under one chapter. He has closed the chapter on Demonetisation, the most eagerly awaited, in the introduction itself. He has explained this in his various interviews post book release as well. His quote “although there might be long-term benefits, I felt the likely short-term economic crisis would outweigh them, and felt there were potential better alternatives to achieve the main goals. This was orally communicated to government in Feb2016. He had shared these views in one of the speeches in Aug14, Black Money hoarders find ways to divide their hoard into many smaller pieces. There are two interesting facts;
First, his consistency about an issue. This reflects in all his speeches on Inflation, Monetary Policy etc. even though selected by him but it’s across time-lines and across various forms.
Second, ability to predict future almost like an astrologer who can see future.

There is an introduction before every speech and conclusion. Introduction is to set-up context for the speech, like where was it delivered, agenda for the forum and what was his idea behind the topic. Conclusion is either to clear misconception, which media has created or to present current perspective. The speech could be categorised as;

1. His views on Indian economy, policy, banking etc.
2. His views on world finance.
3. His views on competing economic theories.

His India view is summarised through speeches delivered as RBI governor or prior to being RBI gov. around five key themes which he has been advocating during his tenure, Monetary Policy including Inflation, banking structure, broadening & deepening of financial markets, financial inclusion and dealing with distress asset. As we know, he worked to ensure that these were implemented and to his credit, instead of going solo, he picked up reports of various committees and tried to deliver them on the ground. He has not shied from admitting his ignorance, NRI FCNR deposit was one. He pointed out that he was not sure of the success but went along since his team were convinced and surprised to get the result. One of the interesting fact on his RBI tenure was his role as CEO and team leader. Being managing team myself, his email to RBI staff in Dec15 (which attracted media controversy) manifest his understanding of team dynamics and workers / managers motivation. During IMF economist as well he has given views on staff compensation, particularly investment manager incentive (one of the reason cited by him for 2008 financial crisis). He has categorised staff into 4;

1. Tier 1 – Best performers, who carry the organisation.
2. Tier2 – Exceed the need for Job but fall short of excellence.
3. Tier3 – Time-servers, source of livelihood. Reasonable work but no desire to excel.
4. Tier4 – Overwhelmed by work, lost any desire to work.

How true!

His world views are mostly around financial market. Most of the speeches are critical of central banks laxity on monetary policy, quantitative easing or increasing cheap money supply, lack of regulatory oversight on financial intermediaries and new financial products while appreciating the effort in advancement of market technology, increase of market participant and so on.

Overall, this book provides good insight into what he has been thinking over last 15 years. It’s like going through the diary for him. You may agree or disagree on his views but you have to give him for consistency. What he was talking about in 2005 has not changes in 2017.

A must read book even if you are not an Indian.

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