Lunch with the FT: Raghuram Rajan
One year on from his appointment as India’s central bank governor, the man credited with spotting the last financial crisis discusses robber-baron capitalism and a fine veg cutlet
Dark monsoon rain clouds hang over Mumbai, as I gaze down at the city’s gothic skyline from the 18th floor of the Reserve Bank of India, waiting for Raghuram Rajan to arrive. It’s a suitably stormy backdrop against which to contemplate my guest’s first year in charge of India’s central bank.
Rajan took over as governor in September last year during a moment of profound financial crisis. He had returned to his homeland in 2012 with an academic superstar’s reputation, forged first at the University of Chicago, then at the International Monetary Fund, where he was chief economist for three years. In 2005 Rajan also gave a celebrated speech at an event for Alan Greenspan in which, instead of praising the outgoing chairman of the US Federal Reserve, he was critical of the financial establishment, predicting many elements of the global financial crisis. Even so, Rajan had never led an institution like the RBI, let alone at a moment when the rupee was in free fall, capital fleeing and India perilously placed, even among the so-called “fragile five” emerging economies.
One year on, and that sense of disaster at least has passed, in part thanks to Rajan’s economic competence and calm public persona which themselves seemed to revive confidence, beginning a market rally that ran from his appointment last September through to the election of India’s new prime minister, Narendra Modi, this May. But the journey has not been smooth, and I am keen to hear his reflections on the often-awkward realities of political power.Rajan arrives just a few minutes late, looking relaxed in a dark suit, offset with swirling red and blue tie. RBI rules do not allow the governor to be bought lunch, he apologises, while trips to restaurants involve too many interruptions. “It’s very hard for me to go out,” he says, with a sheepish shrug. “So when I have guests, they come here, and we eat.”
We are in a suite near Rajan’s office, where a white cloth has been laid over a conference table, on which a bouquet of red roses has been placed. Roughly two dozen portraits of former RBI governors stare down solemnly from the far wall, while a nearby menu lists five courses, featuring a quixotic mixture of Indian and western dishes. Rajan is a vegetarian, he says, but the RBI’s chef has added “non-veg” options for me, including fish and chips.
The menu offers no hint of alcohol so I take a fruit juice, while two waiters in dark traditional Indian suits serve our first course: a salty, warming French onion soup. I begin by asking the governor about his early days in the job. “It felt a little panicky,” admits Rajan. “And, to some extent, this was our fault . . . It seemed like we were flailing around a little bit, with a measure every week . . . It gave the impression of ‘They’re really worried, they’re really panicking.’ ” In fact, he says, India’s position was stronger than it appeared: “The important thing was to change the conversation away from the rupee, which was the underlying measure of panic.”
In person Rajan, 51, is tall, with a tennis- and squash-honed physique, and thick black hair, greying slightly at the temples. In the Indian media, in those early months at the bank, his good looks attracted as much admiration as a hawkish inflationary stance. “The guy’s put ‘sex’ back into the limp Sensex,” wrote one columnist, referring to India’s main stock index....MUCH MORE
