Raghuram Rajan Is Not An Economist: Subramanian Swamy

Subaramanian Swamy also spoke about how a finance minister needs to understand economics as well as politics.

Subramanian Swamy said that former RBI governor Raghuram Rajan did not understand economics. 

(Photo: Altered by The Quint)

“Economics today has become very technical. It is so comprehensive, complex and extensive that only someone who is a professional economist, someone who has studied economics should become the finance minister,” said Subramaniam Swamy, speaking to The Quint’s Sanjay Pugalia in an interview.

However, this person should also understand politics, added Swamy, which is a rare occurrence, according to him.

He went on to refer to Dr Manmohan Singh in this regard, saying that although the former finance minister knew economics, he did not have “the courage to take risks.” He was a capable economist, but he only followed orders, said Swamy.

Responding to Pugalia’s question about whether Singh was a good finance minister, Swamy replied saying that he was, especially under a Prime Minister like Narasimha Rao. Swamy related an anecdote from his Cabinet days saying that Singh would be uncomfortable being attacked in Parliament, in response to which Rao offered to take the responsibility and the blame.

“Those people who think that economics is common sense should understand that economics is not like when one goes to a shop and buys what is cheap and not what is expensive. Economics is about general equilibrium. An action here will have a reaction in another place,” he said. 

Swamy also opened up about his "fight” with Raghuram Rajan, former RBI Governor, in this regard. According to him, Rajan was not an economist, having had no academic background in the subject.

Rajan would keep increasing the interest rate, saying that it would control inflation, Swamy said.

Swamy said that while this logic was true, Rajan failed to take into account the effect this would have on small and medium scale industries, which run on credit and where the margin is very small. This will lead to unemployment and the economy crashing, feels Swamy.

“Hence Rajan had to be removed,” he said.

In the interview to The Quint, Swamy also spoke about other issues gripping India. One of the points he raised in the conversation was that income taxes should be abolished in order to set things right in the economy.

Speaking about the recent breakup of the BJP and the PDP in Jammu and Kashmir, Swamy said that the three-year-old alliance was a “failed gamble” for the BJP. He also labelled Mehbooba Mufti an “incapable” chief minister.