Raghuram Rajan may not be leaving the Reserve Bank of India until September, when his tenure ends, but the government isn't waiting until then to announce his successor. After rumours that the new central bank governor would be named before July 18 – when the Monsoon Session of Parliament begins – reports now suggest an announcement could come as soon as Tuesday. The front-runner is, like Rajan before him, a noted economist who has spent decades honing his craft outside the country: Arvind Panagariya.

The reports are all in the realm of speculation, but a number of news organisations stuck their necks out on Monday. CNBC-TV18 and ABP News both reported that Panagariya may be named the next RBI Governor and that the announcement could come as soon as Tuesday.

Those reports from unnamed sources were then picked up by Reuters, which put the news on its wire service – meaning the Panagariya speculation is now everywhere. The careful secrecy on Prime Minister Narendra Modi's recent Cabinet reshuffle suggested that it is possible for the government to be entirely silent about leadership changes. So the fact that Panagariya's name has made it out suggests that it is either very speculative or is part of an agenda to prepare the ground.

Renowned economist

Panagariya is one of India's foremost economists. He is a protege of renowned economist Jagdish Bhagwati, holds a PhD degree from Princeton University, was a professor of Economics at Columbia University and has been the chief economist of the Asian Development Bank. In the past, he's put in time at the World Bank, International Monetary Fund, World Trade Organisation and the United Nations Conference on Trade and Development. In 2012, he was awarded the Padma Bhushan.

In January 2015, Modi appointed Panagariya to be vice-chairman of the NITI Aayog, the Modi government's think tank aimed at replacing the Planning Commission. Over the last few years, Panagariya has become famous for his advocacy of Modi's famed Gujarat model, being involved in the Bhagwati-Amartya Sen spat and for being India's chief negotiator at the G-20.

Whoever is picked, the next RBI governor will be taking office after the infamously nasty campaign by Bharatiya Janata Party Member of Parliament Subramanian Swamy, who attacked Raghuram Rajan for being an American agent who was not "mentally fully Indian". It was only after Rajan said he wouldn't be seeking a second term that Modi obliquely chided Swamy for these attacks, saying the RBI governor's patriotism couldn't be questioned.

Mentally Indian?

Modi's statement would help if he does end up picking Panagariya, because otherwise the same criticism might apply to him too. While often described as Indian-American, the renowned economist told the Wall Street Journal in 2013 that he "remains an Indian citizen," albeit a non-resident one – the same charge that Swamy leveled at Rajan.

Moreover his approach is foreign, as admitted Bhagwati himself acknowledged in 2014, saying "he’s an American-style economist. He really works with numbers."

Seeing as Swamy appears to be an important advisor in the larger scheme of things in Modi's government, even after his apparent censure, it might be worth looking briefly at his opinion of Panagariya.

Swamy didn't attack Panagriya after the Rajan announcement, an approach he chose to utilise with the Prime Minister's Chief Economic Advisor Arvind Subramanian. In an interview to IndiaRight.org, a website that says it is owned by the Centre for National Rennaissance – an organisation that features Swamy as its trustee and chairman – the MP put down his views of Rajan, Subramanian and Panagariya, saying they are not driven by ideology.

"Reserve Bank of India Governor Raghuram Rajan is like those evil doctors who think that by killing the patient you can bring down the temperature of the patient and not by administering medicine. These are the reasons [for the economic mess]. It is kind of ideology-free approach to dealing with taxation that is causing the unrest.


That’s right, because people like Rajan, [Chief Economic Adviser] Arvind Subramanian, [NITI Aayog chief Arvind] Panagariya – they don’t have any ideology. There are some things you don’t do if you are ideologically inclined. If you are not, you feel anything that maximizes revenue is okay… Revenue-driven with increase in the discretionary powers of revenue collectors."