Former RBI governor Raghuram Rajan today warned of “policy uncertainty” for the world economy due to there being a “bunch of new leaders” who need to prove they are strong, even as he exuded confidence about all large economies doing well. Without specifically mentioning India, Rajan said, “This is the first time in a long while we have seen all the big engines firing at the same time including the large emerging markets … We have seen trade picking up. “We are seeing early signs of investment intentions. Of course there are always clouds. There are clouds this time also,” he said. In an interview to CNBC, the Chicago Booth School professor and the outspoken economist also said the “good news is some of the fears about the (Trump) administration that it would move immediately to a more protectionist stance haven’t played out”.
“There have been noises but of course the strong action that some people feared against Mexico, against China hasn’t really materialised. That’s the good news,” he said while referring to Donald Trump administration in the US. Talking about the possible risks before the world economy, Rajan who served as RBI governor for three years, said, “There is lot of policy uncertainty right now because of the work the (US) administration is going to do and how much it can achieve.
“But also there is geo-political risk. We have a bunch of strong leaders around the world who are already well entrenched in their strength. “We have a bunch of new leaders who need to prove themselves that they are strong. And in that kind of environment, who has room to back off if in fact there is a confrontation. We have many areas of confrontation.” Rajan further said as the US monetary policy normalises, “we will see more stress” on heavily indebted entities.
Coming to the defence of Raghuram Rajan, his Chicago University colleague and co-author Luigi Zingales has said the RBI Governor is being attacked for “fighting the inefficiency of the banking system” and for taking on the crony capitalists in the country.
Amid a high-decibel debate in India on whether Rajan will get an extension or not beyond his current term ending this September, Zingales said governorship earlier used to be “entrusted to grey bureaucrats that left no impact”.
“Rajan, however, is the dream of the new India: young, competent, and reached the top of the Indian central bank because of his skill, not because of his political alignment,” he wrote in an article.
Rajan, a former Chief Economist of the IMF and an on-leave Professor of Finance at University of Chicago Booth School of Business, has been under attack from the ruling party BJP’s Rajya Sabha MP Subramanian Swamy, among others, for what they term as the RBI Governor’s failure to effect necessary interest rate cuts to boost the economy.
Zingales, who is Professor of Finance at the same school and has been Rajan’s co-author as well, said a central banker would have a “guaranteed re-confirmation” in any country in the world after managing to reduce “inflation from 11 per cent to 5 per cent while simultaneously enabling an increase in growth from 5 per cent to 8 per cent in just three years”.
While admitting that he may be “positively biased” as Rajan has long been his colleague and co-author, Zingales, termed the charges as absurd, including regarding his nationality, as he eulogised the RBI Governor on all fronts.
RBI Governor Raghuram Rajan, currently in the eye of the storm over his ‘one-eyed is king among blind’ remark, may be the most powerful person at the central bank, but he does not appear to be the top-paid one!
As per the latest details published by the Reserve Bank of India (RBI) under the Right To Information Act, Rajan’s total ‘monthly emoluments’ stood at Rs 1,98,700. This included a basic pay of Rs 90,000, Dearness Allowance of Rs 1,01,700 and ‘others’ of Rs 7,000.
However, the ‘monthly emoluments’ were higher than that of Rajan in case of at least three others — Gopalkrishna Sitaram Hegde (Rs 4 lakh), Annamalai Arappuli Gounder (Rs 2,20,355) and V Kandasamy (Rs 2.1 lakh), as per the RBI’s list of ‘monthly emoluments of employees’.
The latest available public figures, published by RBI on its website under the RTI Act, are for the period of June-July 2015 and it could not be ascertained whether these three persons are still with the RBI.
While RBI did not disclose their designations along with the ‘monthly emoluments’, Hegde has served as its ‘Principal Legal Advisor’ in the past.
The total emoluments for Hegde and Kandasamy did not include basic pay or DA components.
When Howard Marks graduated from the Booth School of Business of the University of Chicago, he was turned down for the one job he really wanted. That, he said, was the luckiest moment of his career. The firm that turned him down was Lehman Brothers.
Marks is the co-chairman and founder of Oaktree Capital Management. He spoke to an audience of investment professionals and MBA students at the annual MIT Sloan Investment conferencein Cambridge on February 20th.
His talk was moderated by Randy Cohen, a senior lecturer at the Sloan School. Marks and Cohen discussed a range of topics, including his luck and skill in career choices, the lack of efficacy in forecasting, the importance of second-level thinking, investing in the current interest rate environment and the ingredients for investment success.
On luck and skill in career choices
Marks said he was not the kid who started reading prospectuses at nine years old and then invested his bar mitzvah money. Before deciding on a career in finance, he considered being a history professor, an architect, an advertising man and an accountant. Before graduating from the University of Chicago, he interviewed for jobs in corporate treasury, banking, investment management, investment banking, accounting and consulting.