Raghuram Rajan clarifies ‘one-eyed king’ remark, warns on growth euphoria

April 21, 2016 Naresh Sagar

RBI governor Raghuram Rajan clarifies says India’s out performance is accentuated because global economy is weak<

Pune: Reserve Bank of India (RBI) governor Raghuram Rajan on Wednesday clarified his remark that India was like a “one-eyed king in the land of the blind” and defended the thought process behind the remark that has attracted controversy.

Rajan, 53, also spoke of how “words are hung out to dry, as in a newspaper headline,” robbing them of context and opening them up to misinterpretation.

India cannot get carried away by its “current superiority in growth,” Rajan told an audience of students and bankers at the convocation of the National Institute of Bank Management in Pune.

“My intent in saying this (and it was an off-hand comment in an interview) was to signal that our outperformance was accentuated because world growth was weak,” said the RBI governor, whose choice of words had evoked the displeasure of some government ministers.

“But we in India are still hungry for more growth. I then explained that we are not yet at our potential but that we are at the cusp of a substantial pick-up in growth because of the reforms that are underway,” said Rajan.

He added that in a “news hungry” nation like India, the remarks had been seen as denigrating India’s success.

Finance minister Arun Jaitley had responded to Rajan’s “one-eyed king” remark by saying a growth rate of 7.5% would be a cause of celebration in any other country.

In an interview to financial news website Marketwatch on 17 April, Rajan, when asked about the popular notion that India was the “bright spot” in an otherwise gloomy global economy, said the country still has some way to go.

“Well, I think we’ve still to get to a place where we feel satisfied. We have this saying, ‘in the land of the blind, the one-eyed man is king’. We’re a little bit that way,” Rajan told the website.

On Wednesday, Rajan struck a note of caution.

“We cannot get carried away by our current superiority in growth for as soon as we start distributing future wealth as though we already have it, we stop doing what we are supposed to do to keep growing,” he said. “This movie has played too many times in the past for us not to know how it ends.”

Rajan noted that while India is compared to China in reference to economic growth rates, the Chinese economy is five times larger than India’s and the average Chinese citizen is four times richer than the average Indian.

The Indian economy is expected to grow 7.5% in 2016 compared to China’s 6.5%, according to forecasts released by the International Monetary Fund earlier this month.

“As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest growing large economy. Our current growth certainly reflects the hard work of the government and the people of the country, but we have to repeat this performance for the next 20 years before we can give every Indian a decent livelihood,” said Rajan.

He said his remarks were not meant to disparage was has been done and is being done by governments.

“The central and state governments have been creating a platform for strong and sustainable growth, and I am confident the payoffs are on their way, but until we have stayed on this path for some time, I remain cautious.”

‘Words matter but so does intent’

The media’s scrutiny of what Rajan called an off-the-cuff-remark was a “teachable moment”, said the RBI governor, who is on leave from his teaching post at the University of Chicago.

The RBI governor questioned the manner in which every word spoken by public figures is “wrung out” for meaning.

“When words are hung out to dry, as in a newspaper headline, it then becomes fair game for anyone who wants to fill in meaning to create mischief,” said Rajan, adding that if India is to have a reasonable public dialogue, words must be seen in context and not stripped of it. “That may, however, be a forlorn hope,” he said.

Rajan, in his speech titled ‘Words matter but so does intent,’ didn’t stop there.

“This leads to the question—how much of our language is liable for misinterpretation? How forgiving should we be of a bad choice of words when the intent is clearly different?”

Rajan chose to make this point through examples.

He cited the famous words of Mahatma Gandhi who once said “an eye for an eye will make the whole world go blind.”

One might take umbrage because the comment suggests that blindness is an inferior state of being, said Rajan. “Yet, Gandhiji’s comment was on the absurdity of the event and not a comment on blindness,” he noted.

“If we spend all our time watching our words and using inoffensive language…we will be dull and will not be able to communicate because no one will listen,” said Rajan.

“For instance, an eye for an eye will only make the whole world go blind, could be replaced by—revenge reduces collective welfare,” quipped Rajan. “The latter is short and inoffensive but meaningless for most listeners who haven’t taken economics classes.”

Rajan concluded that all constituents have work to do to improve communication. Speakers have to be more careful with words and listeners should not look for insults where none may exist.

Aparna Iyer