Posts Tagged ‘Jairam Ramesh

Should Urjit Patel earn a rap for not raising the flag on demonetisation and its painful playout? Or is he being made the fall guy for a bungled decision? Sonia Sarkar finds out

Talk about keeping secrets. When Urjit Ravinder Patel travels to Delhi on work, his assistants at the Reserve Bank of India (RBI) headquarters in Mumbai keep three sets of tickets ready for him. This enables him to travel quietly, without anyone getting to know about his plans, an RBI insider says.

If that’s a waste of energy and money, it’s nothing compared to the mayhem that is being played out across the country. And the secrecy about his travel plans is but a tiny dot compared to the blanket of silence that surrounds the government today.

Almost a month after the Narendra Modi government banned 500-rupee and 1,000-rupee notes, people are still waiting for Patel, 53, to reassure them that all would be well. Last week, in his first public remarks after the demonetisation, he said: “The RBI is taking all necessary actions to ease the genuine pain of citizens who are honest and have been hurt.”

On November 8, Patel – in a black suit and a purple tie – told the media that the RBI would be ready with enough new notes to meet the crisis of a nationwide currency crunch caused by the move.

But clearly it isn’t. And fingers are being pointed at the inscrutable man from Kenya who replaced the gregarious Raghuram Rajan this September. Questions are being raised on how involved the RBI had been in the move.

“If the governor had been consulted on demonetisation, then it is unclear why he did not explain to the Prime Minister the enormous disruption withdrawing 86.4 per cent of the currency in circulation would cause to the economy,” says Meera Sanyal, former banker and AAP national executive member.

Patel, indeed, has some explaining to do. As RBI governor, he would have known how many notes the presses could print, and how much time it would take to replace the old notes, Sanyal says. “He would certainly have been aware of problems that would be caused to households, farmers, traders, businesses, schools, hospitals and banks across the country as cash ran out and had to rationed,” she adds.

Speculation is rife. Former RBI deputy governor K.C. Chakrabarty has been quoted as saying that the last government – led by Manmohan Singh – had also discussed demonetisation, but had been advised against the move because the costs were high, the benefits low.

Was the Modi government similarly apprised? “Patel should have told the government that demonetisation was not necessary,” a former RBI governor states. “It was his job to make the government understand that the purpose of nabbing black money hoarders won’t be served by killing notes.”

The number of killed notes is humungous. Over 16.5 billion 500-rupee notes and 6.7 billion 1,000-rupee notes in circulation – amounting to Rs 14 lakh crore – were believed to have been sucked out. So far, reports show that Rs 11 lakh crore have come back to banks, and more may come in. So the government’s belief that Rs 3-4 lakh crore of black money would not be returned to the banks, and thus would the RBI’s gain, may not be accurate.

Yet, how much of all this is Patel’s fault? The jury is out on that, too, though the All India Bank Officers Confederation has asked for his resignation. “The show is entirely managed by the finance ministry and the Prime Minister’s Office. The RBI is only doing a post office’s job,” Chakrabarty says.

Patel may have unwittingly presaged his present predilection. In a 2007 column, he wrote: “Economists feel smug about their insight regarding the merits of an independent (and narrow) central bank. Actually it is politicians who are smart; it helps to have a central bank (designated as independent) that can be blamed for taking away the punch bowl just when the party is getting started, but it can also overrule the central bank and be seen on the side of depositors, who also happen to be voters.”

It’s not easy for a government employee to stand up to the government. But many have done so. The government wanted interest rates to go down but Raghuram Rajan preferred to keep inflation under control instead. Former governor D. Subbarao also didn’t give in to the demand for interest rate cuts during the UPA years. In 1957, a similar issue had forced the then RBI governor, Benegal Rama Rau, to resign after a difference of opinion with finance minister T.T. Krishnamachari.

But Patel, unlike many of his predecessors, has not had much experience in handling political pressures. “Patel could be academically excellent, but he lacks administrative experience in a government office – which is what is needed in a large and complex economy like India’s,” says Chakrabarty.

Indeed, his stints in the government have been short. He was working for the International Monetary Fund (IMF) when he was sent to the RBI on deputation for advising it on the development of the debt market and banking sector reforms in 1996-97. In 2001, he was a member of the drafting team for the RBI’s advisory group on securities market regulations. He was a consultant with the finance ministry from 1998 to 2001.

In 2013, he was appointed RBI’s deputy governor. There was a hitch – having grown up in Nairobi and studied in England and the United States, he didn’t have an Indian passport.

At that point, Prime Minister Manmohan Singh sent a recommendation letter to the home ministry. Patel, Singh said, was “very important for the country”. Some believe Patel had impressed Singh with a paper he had co-written called “The Dynamics of Inflation ‘Herding’: Decoding India’s Inflationary Process”. When the UPA returned to power in 2009, Patel was an expert commentator tracking the first 100 days of the government for a Hindi news channel.

A former Oxford University professor is not as impressed with Patel as Manmohan Singh was. Patel, when he was pursuing an MPhil from Oxford (he later completed his PhD from Yale in the US), did not stand out “socially or intellectually” and did not write any “exceptionally brilliant” papers, says the ex-professor.

“It’s a coterie of economists led by former Planning Commission deputy chairman Montek Singh Ahluwalia, who has a fascination for people who have worked with the IMF and the World Bank, that made Patel’s entry into the RBI possible. Even Rajan has a similar professional background, but he was clearly a distinguished and decorated economist.”

Rajan, in fact, appointed his deputy as the chairman of the RBI’s monetary policy committee, saying that he was confident he would be able to guide the committee to move forward in achieving India’s inflation objectives.

Patel may not have had much experience in governance, but has worked for the private sector. He was the executive director and member of the management committee in Infrastructure Development Finance Company Limited (IDFC) from 1997 to 2006. Reports suggest that it was then that he met Modi, who was the chief minister of Gujarat. Modi offered him the post of independent director and chair of the audit committee on the board of the Gujarat State Petroleum Corporation (GSPC) in 2005-06. (The GSPC borrowed more than Rs 19,000 crore from banks.) In 2008, he joined Reliance Industries as president (business development).

Unlike his predecessor, whose flamboyant manner was regularly remarked upon by the media, not much is known about Patel, the person. Some describe him as “abrupt”. His collection of ties – purple, blue and orange – has often been a topic for conversation. Rajan went for jogs, but Patel is not known as a fitness freak. At the fifth BRICS Deputies’ meet in Durban in 2013, however, he was spotted on a treadmill every morning.

Patel lives with his mother, Manjula, in Mumbai and, if he can, dines with her every evening. The family is originally from Mahudha village in Gujarat’s Khera district, a traditional Patidar belt. His father, Ravinder, moved to Nairobi where he set up a chemical factory. Young Urjit studied at the Oshwal Academy Nairobi Primary and then at the Jamhuri High School.

“Urjit was calm, polite and always smiling,” recalls Umakant Patel, head of the Premiere Club of Nairobi. “He often came to the club for walks with his father.”

He was married in the mid-90s to Vibha Joshi, and the couple divorced in 2003. Joshi was the sister of Arvind Joshi, an IAS officer who was suspended in February 2010 after IT raids. Arvind and his wife, Tinoo, are in jail.

His personal history has little to do with the present, which is, clearly, tense. “He is on test now in what has been his most high profile and important job so far,” says Shumita Deveshwar, director, India Research at Trusted Sources, an independent investment research firm that focuses on emerging markets.

What he needs to do, an economist stresses, is communicate with the people. “He doesn’t talk much, and that’s his real problem,” says the economist who worked with him on a Planning Commission Plan. “Unless he communicates with the media, one won’t understand his stand as the RBI governor.”

Meanwhile, the Twitter world can’t have enough of Patel’s silence.

Missing Notice, says a post.

Name: Urjit Patel; Last seen: Altamount Road; If found inform RBI, Mint Road, Mumbai Distinguishing feature: Says yes to everything.

Another post asks: “Have you seen Urjit? Urjit Patel, 53, last seen at RBI Building. Please come home. All is forgiven. Situation serious.”

And serious it is.

‘To say that my attack on Urjit is personal is utter rubbish’

Congress leader and Rajya Sabha member Jairam Ramesh has demanded the resignation of the Reserve Bank of India (RBI) governor. “Urjit Patel is either guilty of misleading the nation about the RBI’s preparedness on demonetisation or has sacrificed the autonomy of the RBI. Either way he should resign,” he wrote in a recent article. He tells us in an email interview that those responsible for the “chaos, despair and panic among citizens” should be held accountable. Extracts:

Q. RBI governor Urjit Patel says the RBI is taking “all necessary actions” to ease the “genuine pain of citizens”. Your reaction?

A. The RBI governor’s response has only bolstered my argument that either the RBI misled the nation about its preparedness or got forced into this decision. The governor has not explained in unambiguous terms the cause for this chaos or concrete timelines to end this suffering of citizens.

Q. Finance minister Arun Jaitley called your column “an unfair attack”. Many in the BJP say it was a personal attack on Patel.

A. It is utter rubbish that this is a personal attack. It is now the unanimous opinion of all – bhakts and non-bhakts – that there is chaos, despair and panic among citizens over access to currency notes. So who is responsible for this? There has to be an accountability somewhere. We have a culture in this country where ministers resign over accidents or even natural disasters. This is a disaster of monumental proportion inflicted entirely by poor planning and execution. So is it not right to question the concerned person and authority?

Q. Do you think Patel is handicapped by his old connection with the Gujarat State Petroleum Corporation (GSPC)? [He was an independent director and chair of the audit committee of GSPC and is said to have approved GSPC’s excessive borrowings from banks.]

A. GSPC is certainly the elephant on the 18th floor office of the RBI headquarters! The Comptroller and Auditor General of India has indicted GSPC over its huge borrowings and squandering them away. The Indian Expresshas exposed a related party conflict between [ex-Gujarat energy minister] Saurabh Patel and GSPC. Urjit Patel was the chairman of the audit committee and independent director during this entire time. People in public life should be held to high standards of probity, shouldn’t they?

Q. Will Patel be able to deal with inflation, banking sector reforms and so on?

A. I do not for a moment doubt Urjit Patel’s academic credentials as an economist. The issue here is who is responsible for unleashing this unprecedented misery on the people of India and why should they not be held accountable.

Published in The Telegraph. December 4, 2016.


Tete a TeteTete a Tete

Congress vice-president Rahul Gandhi is a changed man after his sabbatical last year. He may soon become the head of the party, former minister Jairam Ramesh tells Sonia Sarkar

Ravi Shankar’s sitar notes waft in the air. I am early for my appointment, but Jairam Ramesh is already in his study at his residence in central Delhi. The former Congress minister may give the impression that he has all the time in the world for you. But he has been busy.

“You have to do a lot of work when you are in Opposition,” he says.

Last week, Ramesh filed a petition in the Supreme Court, challenging the National Democratic Alliance (NDA) government for passing the Aadhaar Bill as a money bill in the Lok Sabha. A money bill does not need to be passed by the Rajya Sabha, where the ruling NDA is in a minority and where Ramesh, as a member, had suggested amendments. The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016, got passed after all recommendations from the Upper House, primarily suggested by Ramesh, were rejected.

“The government declared it a money bill, which was a fraudulent declaration. I have challenged this,” the Congress spokesperson says.

Ramesh’s recommendations related to privacy. He argued that Aadhaar should not be made mandatory and should only be used for subsidy and welfare programmes.

His criticism of Aadhaar is ironical because it was the Congress-led United Progressive Alliance (UPA) government which launched the Unique Identification Authority of India (UIDAI) with much fanfare in 2010. The project, which promised to give every citizen an Aadhaar number, got mired in controversy, with many holding that it violated a person’s right to privacy.

A swanky office was built in central Delhi for UIDAI during the UPA rule. The former Infosys head, Nandan Nilekani (who later fought on a Congress ticket from Bangalore and was defeated), was made its chairman.

But Ramesh distances himself from the scheme. “Neither (former Prime Minister) Manmohan Singh nor (Congress president) Sonia Gandhi nor I created any hype around Aadhaar. The only person who created the hype around Aadhaar was Nilekani,” the former rural development minister says.

Ramesh is one of the most vocal leaders of the Congress. Political watchers describe him as a good communicator, always articulate and often provocative. “Communication is also visual these days, not just oral. It is not about your words but also your body language that matters,” he explains.

It would seem that the mantra has dawned upon the Congress rather late. The party has often been criticised for not managing to communicate its policy to the people, unlike the Bharatiya Janata Party, which excels in coining slogans.

“Narendra Modi has certainly brought a greater awareness of marketing, networking and communication into the political class,” Ramesh says, adding that he gives full marks to the Prime Minister’s “packaging” skills. “Whether it is Digital India or Pradhan Mantri Jan Dhan Yojna or Aadhaar or the Swachh Bharat mission, he has re-packaged all our schemes well,” he says.

Ramesh, who was also minister of state for drinking water and sanitation, refers to the Swachh Bharat mission, which, as Nirmal Bharat, was one of the planks of the UPA government. He believes that when issues such as hygiene and cleanliness are taken up by a prime minister, they get “sanctity”. Manmohan Singh, on the other hand, did not bring them up.

“When I was the minister, I said that India needed more toilets than temples, but I could not get my PM to talk about it,” Ramesh laments.

But Modi’s biggest failure, he adds, is that he has not brought business to India as he had promised. “There is disappointment and disenchantment, if not disillusionment, among people in the business community who voted for Modi. But the Prime Minister has to outgrow Twitter and Instagram to know the reality,” he says.

He describes Modi as “a ‘ dramebaaz‘ prime minister and not a ‘gravitas’ prime minister”, and maintains that India is now marching to an “illiberal” democracy. “The core of democratic structures – debate, dissent, discussion, compromise and negotiation – is slowly disappearing,” he says.

Ramesh himself grew up in what he refers to as an “ecumenical Hindu family”, learning Sanskrit from the age of nine. His father, a Vaishnavite and a Shankaracharya devotee, taught in engineering colleges, and he grew up in campuses in Roorkee, Bombay and Ranchi.

He recalls that when he was in IIT Bombay, where he studied mechanical engineering, a professor had urged him to join the Rashtriya Swayamsevak Sangh (RSS). “But I refused,” he says. “I am not an RSS Hindu. I’d rather not be a Hindu if the RSS is going to tell me what a Hindu is,” he says. “This is not Tagore or Gandhi or Vivekananda’s Hinduism. This is bigoted and convoluted Hinduism.”

Ramesh is not a known follower of the silence-is-golden school. During the UPA rule, he had upset Prime Minister Singh when, in Beijing, he criticised his government’s “paranoid” attitude towards Chinese companies and investments. In 2007, he kicked up a row after he asked the then culture minister, Ambika Soni, to resign over a government affidavit to court saying that Ram was a mythological figure.

“I shouldn’t have said publicly what I said,” Ramesh admits. “Now I have learnt not to answer every question.”

He is certainly more careful than he was earlier, but still tends to speak first and regret later. He refers at length to a senior Congress leader’s attire, and then texts me after the interview, earnestly requesting me to drop those lines.

His own attire is eye-catching. Ramesh is usually to be seen in well-cut kurtas and churidars. The most striking feature is his wavy white hair that touches his neck. He doesn’t look his 62 years, and old friends recall that he looked young for his age even when he returned from the US after higher studies and joined the Bureau of Industrial Costs and Prices.

This was followed by stints on the advisory board in energy, ministry of industry and the Planning Commission. Perceived to be close to P.V. Narasimha Rao, he worked for three months in the Prime Minister’s Office in Rao’s government, after which he was sent back to the Planning Commission. Almost 26 years later, Ramesh says he still doesn’t know why that happened.

“That remains a mystery to me,” he says.

In his book To the Brink and Back: India’s 1991 Story, out last year, Ramesh writes that there was speculation that he was too open and accessible and couldn’t work self-effacingly. Others speculated that [godman] Chandraswami was not happy with his presence in the PMO. Some said Rao would not “stomach” anybody whom he saw as “Rajiv’s boys”.

<,>R<,>amesh was also seen as one of Rao’s blue-eyed boys. In fact, through his career, he has had people who’ve mentored him to success. Among the first was former civil servant and diplomat Abid Hussain, who introduced him to the Planning Commission in 1986. He met Sam Pitroda through Hussain, and Pitroda introduced him to Rajiv Gandhi, for whom Ramesh wrote election speeches.

Another adviser was former home minister P. Chidambaram. But the two, it is believed, fell out during the UPA’s second stint.

“We had differences. As finance minister, he had a role to play, and I also had to take care of the Mahatma Gandhi National Rural Employment Guarantee Act, rural roads and Indira Awaas Yojna. We were prisoners of circumstances,” he says.

Some whisper that Ramesh has risen in politics because of his acute networking skills. He laughs at that. “How could you say that when I don’t socialise or go out? Life has been good to me. I have been at the right place at the right time.”

And when you are a Congressman who is close to the Gandhi family, you are, of course, at the right place all the time. He has worked closely with Congress president Sonia Gandhi, and is seen as an adviser to the party vice-president, Rahul Gandhi.

“Sonia Gandhi is a remarkably private person who has been thrown into the whirlpool of Indian politics which is a horrendously public enterprise,” he says. “The poker-faced serious personality one sees in public is different from the real Mrs Gandhi, who has a remarkable sense of humour and an ability to laugh at herself.”

Rahul Gandhi, he adds, is “a friend and colleague, who gives me the freedom to talk”. After his sabbatical last year, when he took a 56-day break from politics, Gandhi is a “transformed man – visible, vocal and active”.

The Gandhi scion, he adds, may soon take over as the president of the party. “We hope it will happen in 2016,” he adds.

We move on to the elections in West Bengal, where the Congress has formed an alliance with the Left parties. What made it strike a deal with a sinking ship?

“The Left is not a sinking ship. The Buddha babu-led Left is very pragmatic,” he says, referring to former chief minister Buddhadeb Bhattacharjee. “Between the Left and Trinamul, the Left is more predictable; Mamata is mercurial.”

A Rajya Sabha member from Andhra Pradesh, Ramesh’s tenure in the Upper House will end in June this year. Sections in the party are said to be opposing the half-Kannadiga and half-Tamil MP’s bid for re-election. “If the party wants me, it will have me. If the party wants somebody else, the party will have somebody else,” he says.

Like Rahul Gandhi, Ramesh is a changed man – he is being careful with his words.