Raghuram Rajan had to step down for opposing demonetisation, reveals P Chidambaram

He alleged that Raghuram Rajan submitted a five-page letter to the central government expressing his discontent with the decision of demonetisation.

New Delhi, Feb 11: In a shocking revelation, former finance minister P Chidambaram said that former Reserve Bank of India governor Raghuram Rajan stepped down from his post because he was against demonetisation drive announced by the Prime Minister Narendra Modi on November 8, 2016. He also said that Raghuram Rajan submitted a five-page letter to the central government expressing his discontent with the decision of demonetisation and dared to make it public. Former finance minister made these comments on the launch of his book ‘Fearless in Opposition, Power and Accountability’. Apart from P Chidambaram, senior political leaders including Chief Minister of Bihar Nitish, Kapil Sibal and Communist Party of India (Marxist) General Secretary Sitaram Yechuri also addressed the event.

“If the government is transparent, it should make that note (letter) public. The note was written on behalf of RBI. It was about demonetisation arguing why it should not be implemented,” Chidambaram was quoted in an IANS report as saying.

While referring to Bharatiya Janta Party Rajya Sabha member Subramanian Swamy’s scathing attacks on Raghuram Rajan, he also alleged that the central government made it difficult for former governor to function independently. Subramanian Swamy was highly critical of former governor’s functioning. In August last year, he said, “He [Raghuram Ram] was harming the India economy by raising interest rates and making it impossible for small and medium industries to take loans from the banks.”

P Chidambaram also alleged that constant attacks on Raghuram Rajan by the central government made it impossible for him to continue for the second term as Governor of Reserve Bank of India. He said,”They (government) made it so difficult for Rajan to continue and, in retrospect it appears, one of the reasons he was made to leave. They wanted to demonetize currency and Raghu was opposed it.”

In his open letter to RBI employees on June 18 last year, Raghuram Rajan said, “I am confident my successor will take us to new heights with your help. I will still be working with you for the next couple of months, but let me thank all of you in the RBI family in advance for your dedicated work and unflinching support.”

Prime Minister Narendra  Modi announced the decision of demonetisation on November 8 last year which ended the status of old Rs. 500 and Rs. 1000 notes as legal tender. According to an estimate, about 86 per cent of currency in circulation were soaked from the economy during demonetisation.