Keep your eyes only on your duty.

In his speech on becoming the Governor of the RBI, Mr Raghuram Rajan said," I talked about the primary role of the RBI as preserving the purchasing power of the rupee, but we have two other important mandates; inclusive growth and development, as well as financial stability."  For us Indians it was a terrifying statement. Any central bank must use monetary policies to control inflation, which keeps the currency stable and reduces government borrowing, thereby keeping fiscal deficit under control. The bank may keep an eye on commercial and high street banks but growth and development are definitely not the responsibility of any central bank. " Inclusive growth " has been adopted by the Congress as an excuse for regressive socialism which only wastes money, increases corruption, as we have seen with a succession of scams, and increases poverty. Politicians conveniently point to the US and Japan where central banks have resorted to massive bond buying to flood banks with liquidity to increase lending and thus stimulate growth. However, they take great care not to mention the most important fact and that is inflation, which was 2% in the US and 0.7% in Japan in July, whereas it was 9.64% in India. After years of deflation, which saw the Yen strengthen to 78 to the dollar last year, the Japanese bank is deliberately trying to engineer inflation up to 2% to weaken the Yen and so increase exports. As usual the freeloading press is trying to protect our politicians by writing that other BRICS countries have also seen their currencies fall, although not by as much as the rupee. Not true. The Brazilian Real was 2.5 , strengthened to 1.5 in 2011 and is now at 2.3 to the dollar. The Russian Ruble was 36 in 2009, went up to 28 in 2011 and is now at 33.27 to the dollar. The South African Rand was 10.5 in 2009, 6.5 in 2011 and is now 10.03 to the dollar. This means that all these currencies have fallen against the dollar recently but are still stronger than what they were in 2009. The Indian rupee on the other hand was 39 in 2007, 45 in 2009, 45 in 2011 and is now at 65.24 to the dollar. This is only because the previous governor failed in his primary duty of controlling inflation by submitting to Congress bullying. Mr Rajan is not a pen-pushing civil servant and that maybe his strength. We hope he is brave as well.