MUMBAI, (Reuters) – India’s “rock star” central bank governor Raghuram Rajan, feted by foreign investors but under pressure from political opponents at home, stunned government officials and colleagues on Saturday by announcing he would step down after just one three-year term. Rajan, a former chief economist at the International Monetary Fund, is held in high esteem by policymakers and investors at home and abroad for overhauling the way the Reserve Bank of India (RBI) operates.
But he has faced mounting criticism from a faction within Prime Minister Narendra Modi’s ruling party for keeping interest rates high and over a perception that he had begun to stray into politics.
In a letter to RBI staff, Rajan said he planned to return to academia, even as he noted two of his actions – the creation of a monetary policy committee to set interest rates and the clean-up of the heavily indebted banking sector – remained unfinished.
“While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on Sept. 4, 2016,” Rajan wrote.
“I will, of course, always be available to serve my country when needed.”