Monday, 4 November 2013

Why Raghuram Rajan should not have been appointed Governor of the Reserve Bank of India

Raghuram Rajan has been forced to clarify whether he retains his Indian citizenship and according to him, he has never applied for citizenship of any other country.

He has declared that he has a United States green card, and that he never became a US citizen.

Nevertheless,  it is very unfortunate that the Government of India has appointed  Raghuram Rajan as the RBI Governor.

Even if Raghuram Rajan is an Indian citizen, he has spent only 11 years of his 50 years in India. He first lived in India as a young child. Then spent the rest of his childhood and teen-aged years overseas. He returned to India to obtain an engineering and a management degree and then moved to the United States where he chose to establish his home and permanent residence after completing a PhD at MIT.

He then spent almost three decades in the United States and established permanent residence in the United States and obtained a Green Card for this purpose.

His children were born in the United States and are US citizens. What is the citizenship status of his wife?

All his investments, property, wealth and that of his family is presumably located in the United States and in dollar denomination.

By choosing the United States as his permanent residence, Raghuram Rajan had effectively cut off his ties to India.

If Montek Singh Ahluwalia and Manmohan Singh (both of whom are fervent enablers of US governmental and US corporate interests in India) had not invited Raghuram Rajan to India, Raghuram Rajan would most likely have applied for US citizenship.

Raghuram Rajan's work, research, and life experience have not concerned India.

Why has he now been appointed as RBI Governor? Surely, there were more qualified, experienced and capable candidates who maintained their ties to India and who have more experience of India's economic and social realities.

It also turns out that Raghuram Rajan's father, R Govindarajan, was not a diplomat, but an intelligence official who was also associated with RAW.

I reproduce below some additional information about Raghuram Rajan.

What is of interest is that towards the late 1980s and early 1990s, Raghuram Rajan's father was a senior intelligence official, and was a part of RAW.

So a RAW official's son leaves India on a scholarship for a PhD at MIT (a major recruiting ground for the CIA), and then settles in the United States for the next 30 odd years.

Such an individual ought to have been on an intelligence black-list of likely CIA indoctrination and recruitment, and instead 25-30 years later, our government rolls out the red carpet for him and invites him back to India, first making him the Chief Economic Advisor and now the Governor of the RBI.

Also, Raghuram Rajan is wrong when he calls his US green card a mere work permit. it is much more than that. It is a document establishing permanent residence and granting residency status in the US.

A wikileaks US embassy cable describes a meeting where Montek Ahluwalia and David Mulford met and discussed as follows:

"Ambassador again stressed the importance of the financial sector in upcoming U.S.-India discussions, noting that a central economic issue for India is the long-term status of its financial markets. He added that India's financial markets today have the makings for a regional financial center, given India's huge hinterland and large and increasing savings rates that mirror the conditions in the U.S. banking sector a generation ago. The Ambassador said that virtually all large U.S. banks were once domestic-centered, before they went global. Ahluwalia agreed, noting that the GOI (with MOF and Prime Minister approval) had just commissioned a High Level Committee on Financial Sector Reforms, composed mostly of private sector individuals, to make recommendations by next March on next steps in financial sector reform. He added that, until India ends the dominance of the State in the banking sector, there will never be a level playing field for private or foreign banks that is necessary if India is to establish itself as a regional financial center. MULFORD"

This is what Raghuram Rajan has been brought in to achieve.

"enter raghuram rajan - 5

By the time Rajan was preparing to leave India, his father had ascended to the top ranks of R&AW.
The agency’s director, SE Joshi, was set to retire in June 1987, and Govindarajan was in line to succeed him.
But according to two published accounts, which were confirmed by a former R&AW chief, his ascent was suddenly derailed earlier that year by an unexpected development: the eruption of the Bofors scandal.

On 16 April, Swedish Radio aired its first report on the kickbacks paid by Bofors to Indian officials and politicians.
Late that same night—after midnight, according to Prashant Bhushan’s book Bofors: The Selling of the Nation—Rajiv Gandhi summoned his IB chief and the acting director of R&AW, Govindarajan, to an urgent meeting at his house: 
They were immediately ushered into the Prime Minister’s office. The Prime Minister was wide awake and quickly asked them what was happening. Govindarajan, who had just returned from out of town the previous night, was taken by surprise. He had no idea what the Prime Minister wanted to know.
As a result, Gandhi superseded Govindarajan and installed a more junior officer, AK Verma, as the R&AW chief. Govindarajan was instead made chairman of the government’s joint intelligence committee, where he remained until his retirement.
(In his memoir of the spy service, The Kaoboys of R&AW, the late B Raman provides a less detailed account of the same episode without naming Govindarajan, referring instead to an “officer of the Tamil Nadu cadre” who was superseded because Gandhi was annoyed that “he was unaware of the Bofors scandal when it broke out in the Swedish electronic media.”)
When I first mentioned his father’s career in R&AW, Rajan was taken aback; it seemed possible nobody had put the question to him before. (“He’s very uncomfortable talking about himself,” one of Rajan’s old friends told me.)
He confirmed that his father had been in line to head the spy agency, but denied that the Bofors story had anything to do with Gandhi’s decision.
“My father’s experience in bureaucracy was a good one,” Rajan said, uncomfortably, when I asked if it had in any way influenced his decision to return to India.
“But that didn’t—I didn’t join the bureaucracy. So it wasn’t what I wanted to do. I wanted to read, write, think.”"

Also See

"...IN 1966, three years after his third child, Raghuram, was born in Bhopal, R Govindarajan was posted to Indonesia. A failed coup the previous year had sparked off a frenzy of violence, which targeted communist supporters of the Indonesian president Sukarno and claimed more than half a million lives. “I remember the sound of machine guns in the evenings,” Rajan told me. “My mother bore the brunt of the uncertainties. You had soldiers with a lot of authority moving around. It wasn’t clear that they would respect diplomatic immunity.”

Profiles of Rajan invariably describe him as the son of an Indian diplomat, whose further assignments took the family to Sri Lanka and Belgium. Growing up, Rajan assumed his father worked for the Ministry of External Affairs. But Govindarajan, who topped his 1953 Indian Police Service batch, was an officer in the Intelligence Bureau (IB); he would have been dispatched to Indonesia as a spy, not a diplomat.

When the IB was split to create a separate external intelligence agency in 1968, Govindarajan became one of the original “Kaoboys”—the first men to join the new Research and Analysis Wing (R&AW) under the legendary spymaster RN Kao, for whom Rajan’s father was officer of staff, according to a former R&AW director..." 

Also see

I reproduce below a Wall Street Journal news story on Raghuram Rajan's unduly curt and dismissive responses to genuine concerns regarding his nationality. Is this the final word on this issue and does this constitute conclusive proof that Raghuram Rajan was never a citizen of the United States?

Wall Street Journal 
October 30, 2013, 4:15 PM IST
Raghuram Rajan Faces Birther-Style Questions
ByNupur Acharya

Agence France-Presse/Getty Images
Raghuram Rajan at RBI headquarters in Mumbai, Oct. 29.
“I’m an Indian citizen [and] have always been an Indian citizen.” With those words Tuesday, Raghuram Rajan, the governor of India’s central bank, hoped to put to bed lingering questions over his nationality.
Mr. Rajan, a U.S. green card holder, says he’s has been receiving “a mail a day” asking him to confirm that he is in fact an Indian. He didn’t specify where the mails had come from or who sent them.
“It would be a joke if some people weren’t so serious about it,” Mr. Rajan said. When asked the question again by a reporter at a news conference in Mumbai this week, the governor, who has been likened to James Bond by the Indian media, responded in unusually clipped tones. “I’ll answer this question once, and only once, and am not going to answer it again,” he said.
The issue of Mr. Rajan’s citizenship was first raised by Murli Manohar Joshi, a senior leader of the Bharatiya Janata Party, the main opposition party in India’s Parliament, in August just before Mr. Rajan took office at the Reserve Bank of India. According to a report in The Indian Express newspaper, Mr. Joshi issued a notice asking Parliament how foreigner could be appointed as RBI governor.
Mr. Rajan is a globally renowned economist, who famously foretold the impending global financial collapse at a 2005 gathering in honor of former U.S. Federal Reserve Chairman Alan Greenspan. The 50-year-old bank chief graduated from the Indian Institute of Technology in New Delhi, one of India’s most highly-regarded schools.
He also holds degrees from the prestigious Indian Institute of Management in Ahmedabad in Gujarat, and a Ph.D. from the Massachusetts Institute of Technology in the U.S.
Mr. Rajan has served as chief economist at the International Monetary Fund and was a professor of economics at the University of Chicago’s Booth School of Business. He returned to India to work as chief economic advisor to the government in 2012. But like Barack Obama he has faced nagging questions about whether he has the correct nationality to do his job.
“I do hold a green card. The green card does not require you to take a pledge of allegiance anywhere. It is simply a work permit which you need to have to work in another country that is the United States,” Mr. Rajan told reporters.
Unfortunately, that permit is about to expire, he added.
“In some sense, it is to me shameful we spend so much time on such issues [of nationality.] There was a time when India was open to the outside. When we didn’t really care where one came from, we sort of incorporated them in what we were doing,” Mr. Rajan said.
His question to those pursuing this line of questioning was, ‘Why do they care?’
“But if they do care, the answer is I’m an Indian citizen and proud of being an Indian citizen,” he concluded.
India takes the citizenship of its leaders very seriously.
Sonia Gandhi, the president of the ruling Congress party, has often been targeted by he political opponents because of her Italian roots.
A legal case brought by politician Subramanian Swamy recently, questioned whether a non-Indian could edit one of the country’s national newspapers.
Other countries however have drafted in help from abroad to sort out their economic problems. The Bank of England this year appointed Canadian Mark Carney as its governor to help it through the economic recovery.
Follow India Real Time on Twitter @WSJIndia. 

Copyright 2013 Dow Jones & Company, Inc. All Rights Reserved 

more  information 

naturalized US citizens have to swear allegiance to the United States



How could he even have been appointed as Chief Economic Advisor to the Government of India?

This disclosure by Raghuram Rajan on his Chicago Booth Faculty page shows that he was engaged in private employment even while he was serving as Chief Economic Advisor to the Government of India in 2012.

BDT Capital Partners, is a highly secretive merchant bank that provides advice and capital to family-owned companies. Raghuram Rajan has admitted that he earned income from BDT Capital in 2012 even while he was Chief Economic Advisor to the Government of India and was therefore in Indian Government employment. 

Is the Indian Government hiding the American nationality of RBI Governor Raghuram Rajan 

Jan 05, 2014, 03.49 PM IST
Nationality details of RBI guv cannot be given: Gov
Government has refused to answer queries on the nationality of Reserve Bank of India Governor Raghuram Rajan citing a provision of the RTI Act which exempts information on cabinet documents to be disclosed.
"The proposal which is a note received from the Finance Minister being 'Cabinet paper' is exempted from disclosure under Section 8(1)(i) of the RTI Act 2005. However, a copy of order No 18(75) EO/13(ACC) dated August 6, 2013 conveying approval of the ACC, in the matter, is enclosed," the Central Public Information Officer of the Cabinet Secretariat said.
However, the cited section mandates that material, on the basis of which the decisions were taken, should be made public after the decision making process is completed.
The reply was sent to activist Subhash Agrawal in response to his RTI application seeking to know whether Rajan has American nationality at present or at some time earlier along with relevant details.
He also sought complete information on nationality of Rajan from his birth till date mentioning dates of change of his nationality and whether rules permit a person with nationality other than Indian to become RBI Governor.
The issue has already been clarified by Rajan in a press conference last year where he said, "I am an Indian citizen, I have always been an Indian citizen. I always held an Indian passport. I held an Indian diplomatic passport when my father was in the foreign service and when I travelled on behalf of the ministry of finance.
"I have never applied for the citizenship of another country, I have never been a citizen of another country and have never taken a pledge of allegiance to another country."

See earlier posts on this topic 



  1. Just found this blog! Amazing stuff ..

    I am sure you are aware of Milton Friedman led infamous Chicago Boys who ruined Chile ..

    Is there anyway we can stop this selling out??

  2. The Berkeley mafia and the Indonesian massacre -

    stories about economic hit-men

    Orlando Letelier, "The Chicago Boys in Chile: Economic Freedom's Awfull Toll," The Nation, August 28, 1976 at

    and read Milton Friedman did not save Chile at

    and read Pinochet-Era Economics, Borne From “Chicago Boys”, Still Impacting Chile at

    read The Myth of the Chilean Miracle at

    and read Invisible Hand and Iron Fist at

  3. Loved the detailed post and it's eye opening to boot, I had no idea he spent this time in India. As a former admirer or Rajan, I am shocked.

  4. I stopped reading the moment you said that because his dad was in the RAW, he could have ties to CIA. So according to you, being in RAW makes your patriotism suspect?

  5. Mr Anonymous, your loss entirely if you stopped reading mid-way.

    My point would have been clear if you had indeed read the entire post.

    Raghuram Rajan's father as a RAW official would have been in touch with the CIA. His three sons got US scholarships at a time such scholarships were very difficult to obtain.

    Raghuram Rajan chose to settle down in the US and established permanent residence there, acquired a green card which is much more than a work permit, with the intent of obtaining US citizenship eventually. He might well have applied for US citizenship, the full facts are not out yet.


    His commitment is to the US where he would have remained if he had not been appointed/ supplanted to the helm of Indian economic policy making.

    He plans/ intends to retain his US green card, further showing his commitment to the United States as his permanent home and to return there eventually.

    His investments/ savings/ property are located in the US and in US currency.

    Certainly apart from the accident of his birth, his life choices have demonstrated a preference for the US as his domicile over India.

    All of this makes him an inappropriate choice as RBI governor.

  6. Totally agree with you Seema. We desperately need a leader with some spine, who can get some pride back into India.

    The way things are going (BJP and Congress are no different), wemight as well disqualify any person not having over 10 years of USA funded brainwashing from any top Indian post.

  7. It is a pity you guys are thinking about these silly issues. How has indian citizenship stopped A. Raja, Dawood (when he did those acts at least...not sure what it is now), Suresh Kalmadi, .....{add your favorite politician} from looting India. Governor of RBI is a specialist job and looking at any meaningful market measure will tell you that he is doing a great job. So shut up and focus your energy on meaningful things. He is the most qualified RBI governor....ever....and I don't care about his citizenship.

    1. Citizenship of Raghuram Rajan does matter, and he is certainly not the most qualified or a suitable RBI Governor for India. And please don't tell me or anyone else to shut up on my blog.

      Your comment again makes me wonder what after all is Raghuram Rajan's citizenship. .

  8. In today's world, citizenship does not matter in central bank roles transparent cultures.... For example, ask an economist friend of yours to confirm this for you: Stanley Fischer has a dual citizenship (of US and Israel) and he is largely believed to be a very good central banker for Israel. Rahuram Rajan is in a similar league. Please don't shut up (asking for that would be a mistake).... but do focus your energy on something meaningful. All that I am trying to say is that criticize a person for the job he does...good or bad..... Citizenship is meaningless when one has to constantly think about the effects of US Fed's action affecting emerging countries and markets.....what matters more is thought and capability. And if a sincere person from Timbuktu can do that for us, so be it. We have been looted by too many "citizens" of our own country....If you have more meaningful guidelines to judge Raghuram Rajan's abilities, I am all ears.

  9. Not everyone thinks Ragjuram Rajan is the right fit to be RBI Governor -


    Raghuram Rajan rejects reports of tension with Narendra Modi-led BJP

    Edited by Surabhi Malik (With inputs from Reuters) | Updated: April 11, 2014 13:22 IST
    Washington: Raghuram Rajan, Reserve Bank of India Governor, has dismissed as speculation reports of tension between him and the Narendra Modi-led BJP, seen as the front-runner to form government after the general elections now being held.

    Dr Rajan, brought in last September amid much hype to stem inflation and the spiral-down of the Indian rupee, credited the economy's turnaround in the last few months to Finance Minister P Chidambaram. "The success belongs entirely to the Finance Minister and not to the Reserve Bank of India...... we work together and I think one of the benefits is that there is a greater sense of comfort on fiscal consolidation," he said on stage at a high-profile event at the Brookings Institute in Washington.(Watch Video)

    That close association that he has shared with Mr Chidambaram and criticism for Dr Rajan's strategy on inflation from some members of the BJP has led to speculation on the future of his tenure should Mr Modi's party form government at the Centre next month. (India Votes 2014: Full coverage)

    "I haven't had any discussion with the new government. I think this is all press invented differences and I think it should be seen as such speculation rather than any actual differences," Dr Rajan said.

    Reuters had reported last week that strategists in the BJP suggest they would prefer to have one of their own at the helm of the RBI if they form government. (Post-election showdown looms for RBI Governor Raghuram Rajan)

    BJP treasurer Piyush Goyal has attacked Rajan over a series of interest rate hikes intended to curb inflation, now running at double the RBI's longer-term 4 percent target, at a time when economic growth has fallen to its slowest in a decade.

    Dr Rajan has raised the repo policy rate three times by a total of 75 basis points to 8 percent.

    "Governor Rajan is only aggravating the problems and making them worse by increasing interest rates," Mr Goyal, a leading strategist and fundraiser for the BJP, told the Economic Times.

    Subramanian Swamy, a BJP ideologue and former cabinet minister, put it more bluntly. "We can make it worthwhile for him to leave," he told Reuters.

    Dr Rajan, a former International Monetary Fund chief economist is widely viewed as India's most capable technocrat, winning the respect of investors for his handling of the currency crisis that hit Asia's third-largest economy last year.

    "It will be a big loss of face for the country and would create a negative perception among foreign investors if the BJP removes the governor immediately after forming the government," said A Prasanna, an economist at ICICI Securities Primary Dealership Ltd in Mumbai.

    Before moving to the RBI, Dr Rajan, 51, served as chief economic adviser to the Finance Ministry under the Congress party-led government

    "I would not be surprised if a government led by Narendra Modi removes the governor," said Satish Misra, an analyst at the Observer Research Foundation, a Delhi-based think-tank. "Modi does not brook any opposition."

    "It would not be easy to remove Rajan from a constitutional post," said a senior Finance Ministry official, who spoke on condition of anonymity. "It would lead to turmoil in the markets," he said.

    1. The people mentioned in this article (Swamy, Goyal etc.) don't seem to be giving any reason. Anyway, I personally think this issue is a waste of time. I am pretty sure people must have checked his passport that he is an Indian. We are wasting our time and should move on to more important things in life.

  10. Your apprehensions seem to be valid and Rajan may be serving a hidden US agenda in India.
    However, I have been following him for the past year. None of his policies seem to be US driven. He has focussed on curbing inflation in the country, dealing with depreciating currency, and has regulated the financial markets. If he would be serving the US, then he would have surely deregulated financial markets to allow higher access to US investment banks and business entities. Still your doubts are valid and it is too early to predict his allegiance. We may have to look at his future policies, but currently he seems to be an INDIAN.
    As for the rift with the Modi government, it is fundamental economic problem of balance between growth and inflation. Rajan has to raise rates to check inflation, and BJP government is pro-growth. BJP fought the elections on the promise of boosting growth in the country. So they have problems with Rajan, who is more focussed on inflation rather than growth. The problem between them is due to BJP's political commitment and not due to Rajan's nationality. Both the issues are completely separate.
    As for Rajan’s qualifications. He may not be the best qualified for the job but he is the best suited. First he is an Indian (he hasn’t proven otherwise yet). Second, he has the guts to implement bold radical decisions. You do not want a central banker who is afraid of imposing necessary regulations. He is not afraid to speak his mind (evident when he predicted subprime crisis before world bankers) and can take harsh decisions.
    Finally, I would say that you do not need an Indian to do the job, you need an economist. Carney is doing a fine job in the UK. Even if Rajan has US citizenship, but is able to solve India’s economic problems, then we should not have any problems.