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  • Sorry Raghuram Rajan, I got it wrong

    Posted On September 10, 2017

    By Karan Thapar

    Journalists often receive stories from confidential sources and, though we double-check, the information is ultimately accepted on trust. Alas, sometimes, we get it wrong. That happened to me on the 16th of July when I wrote about Raghuram Rajan and the governorship of the Reserve Bank. Today I want to make amends.

    This is what I wrote in July: “Unimpeachable sources have told me that Mr. Rajan was offered a two year extension. However, the problem was his inability to get a further extension of leave of absence from Chicago University without losing his valuable tenure. Mr. Rajan could only stay on for 8 additional months. Quite understandably, the government decided this would be inadequate. It would only add to the uncertainty at the top of the Reserve Bank. It, therefore, opted to choose a new Governor.”

    I did not check with Mr. Rajan because he’s repeatedly made clear he doesn’t want to speak for at least a year and I didn’t want to misuse the fact I know him to put pressure. However, I thought I had corroboration from what he told the New York Times after his departure: “He said that his departure was based on his inability to reach an agreement with the government on serving longer but not serving another full 3 year term.”

    I was wrong. In an interview to the Times of India last sunday Mr. Rajan said: “I didn’t leave when my leave expired; there was absolutely no issue about extending my leave, if necessary. I left when the government and I could not agree on terms for me to stay on … we never reached a point where the government made me an offer to stay on … there was no offer on the table.” Unfortunately, the paper failed to appreciate the significance of this answer.

    Actually, in July itself Mr. Rajan wrote pointing out I was wrong. We exchanged letters where he explained what transpired between him and the government. In a nutshell, he told me what he said to the Times: that he had indicated a willingness to continue and Chicago had no problem granting him leave. The ball was in the government’s court. They needed to make an offer but did not. This was the opposite of what I had been told, that he had been made an offer which he was unable to accept.

    However, Mr. Rajan asked me to keep our correspondence confidential. That meant my lips were sealed. It also meant I couldn’t correct my mistaken column without revealing he had told me the truth. After all, the correction had to be authoritative and not source-based.

    This still leaves unexplained what he told the New York Times. I specifically asked about this. Here’s his answer: “The NYT statement was inaccurate and was based on a response to a question of why I thought the government did not want me, since I said I was available. I said I did not know but offered some conjectures that put a better light on the breakdown than the conjectures that were rife in the market … I did not want to upset foreign investors. They ran with one of the conjectures.”

    Of course, there’s bound to be more to the story of the relationship between Raghuram Rajan and the government. So far we’ve only found out a few telling details. I hope the rest emerges before long.

    Meanwhile, my apologies to Mr. Rajan for getting it wrong.

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