Tuesday, 4 October 2016

The Big Talk:

Much commentary, often bordering near speculation, had been dedicated to a pattern of loose talk which rotated in a circular manner of ‘will he, won’t he’ guesswork. Raghuram Rajan announced an end to needless speculation by expressing his desire to return to academia after his responsibility as India’s central banker comes to an end. While his decision shocked many and with certain sections of media behaving as if we had been sucked into an apocalypse, the government finally announced that it was Urjit Patel who would succeed Rajan.

There is no doubt that Raghuram Rajan’s proximity to the media led to the creation of an invisible halo around him. One often wonders whether if a routine exercise such as the appointment of India’s central banker would have triggered so much speculation and interest. Surely, there is no denying that Raghuram Rajan’s frequent media appearances, widely covered lectures and a highly relatable personality often led to a debate whether if he has succeeded in sparking an interest in Economics especially among the common man.

The central idea of this piece is to ruminate on the role of communication as the central banker. For instance, the US Federal Reserve chairperson’s direct interaction with the media is just four times a year. Central bankers are appointed with a clearly defined mandate of maintaining inflation and assessing the performance of the economy and recognising potential threats due to geopolitical turbulence. While it is not practical to be inaccessible, it is important to strike a balance between speaking at a predictable moment and taking the market by surprise. At most, one would acknowledge a few intermittent sound bites which are usually accepted since the media poses questions on the sidelines of some events. Communication, therefore, is the most important in both cases and maintaining a balance is essential.

There is absolutely no doubt that the media fawned over Raghuram Rajan. His candid opinions often led him to making inroads into TV studios, giving one-on-one interviews. Among other things, we saw him attend school functions as a chief guest and interacting with students. Much as it is important to acknowledge what the future thinks of the national economy, it made one question whether if a central banker had to issue a statement on every topic, including the pithy debate on alleged ‘intolerance’ in India, which was instigated by the media.

In contrast, Urjit Patel as the new RBI Governor, despite his brilliance and command on macro-economics, we have rarely seen him deliver lectures or preside over events. As his inaugural monetary policy review was announced on Tuesday, one could not help but admire the restraint the governor maintained. Maintaining a low-profile and yet getting his point across through a repo rate cut, the focus inevitably shifts back to the macros such as economic growth. The debate among the media largely steered around the cut in repo rates and surprisingly, on Twitter too, conversations veered around the policy review and the rate cut.


There is absolutely no doubt that everyone in India looks for those 15 seconds of fame. Yet, a balance between how much to speak and when, is essential and if the balance is not achieved, we often end up with sound that gets amplified or unnecessary white noise. The role of the RBI in India is still too prominent and it is a respected institution. Yet, one can only hope that the gaffes committed under the tenure of Raghuram Rajan forces a rethink on the communication mechanism of India’s central bank. 

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