RAJAN, MEDIA AND THE MIDDLE CLASS

Ananda Mohan Kar

In 2004, Bharatiya Janata Party (BJP) badly lost the parliamentary election. The ‘anti-BJP’ media, quite a large section of the media industry, projected the defeat to be the result of the anger of the poor. The poor reacted angrily to BJP’s India shining programme, we were told. However, the fact of the matter is that the party did well in the backward regions. It suffered major blows in the urban areas – the constituencies that were regarded as its stronghold. Actually, the lowering of the interest rate made the middleclass extremely unhappy and they turned away from the BJP. Some ‘secular’ commentators linked the defeat to the 2002 riot in Modi’s  Gujrat though it is a different story that Modi won election after election in his state.

The negative attitude towards BJP, and more particularly towards Modi, continued and the bitterness increased between BJP and the media. But the situation gradually turned in favour of Modi.The new technology gave him something to challenge the mainstream media houses. Modi and his supporters were quick to take advantage of the social media. Finally, in 2014, after a gap of ten years, NDA lead by Narendra Modi came to power.

But the ‘anti-Modi’ journalists remained active. There was a search to find out an alternative to Narendra Modi. But it became a difficult task. The leadership of the main opposition party, Congress, became extremely weak. The others were more or less confined to their own region having very little influence at the national level. Moreover, there were serious allegation of corruption and of poor governance and criticisms for poor governance. Some showed terrible record in the maintenance of law and order. In this context, these media people found an icon who can be put against the Modi government – Raghuram Rajan.

In Rajan, the ‘anti-Modi’ media found everything they wanted – a handsome person, a perfect gentleman and one of the great economists of his time. This UPA appointed RBI Governor was media friendly and was ready to talk on matters that are ‘outside’ the jurisdiction of the RBI. The economist trained in the West thought it right to speak up his mind on ‘important’ social issues. His views gave the ‘secular’ journalists the opportunity to attack the Modi government on ‘growing intolerance’ in the country against the ‘minorities’ and the people with ‘different opinion.’ Rajan’s statements were also used by the media to ridicule the economic policy of the government.

Unfortunately, Rajan allowed the media to put him in the middle of a political fight between BJP and its opponents. The critics accused BJP for not being able to accept a person who did not belong to the circle of the Sangh Parivar. The BJP supporters on the other hand were quick to point out that the ‘growing intolerance’ was the campaign carried out by  those who hated Modi and it was not  the real picture of the country. The number of foreign tourists did not come down despite such campaign and there was no major riot in the country. They also pointed out that the out spoken economist never made any big statements about the massive corruption that took place during the UPA rule to embarrass the Congress. The similar observation can be made about the greatest economist Nobel Laureate Prof. Amartya Sen. The huge corruption not only damaged India’s image but also ruined the future of the poor in India.

With the passage of time, differences emerged between the RBI Governor and the Finance Ministry over the interest rate. Rajan remained stubborn and did not bring down the interest rate as desired by the Finance Ministry. The move was hailed by the ‘anti-BJP’ media as a success to protect the ‘sovereignty’ of the institution named RBI.

All these created rift between the BJP and Rajan and that led to the scathing criticism of the RBI Governor by the BJP Rajya Sabha MP Subramanian Swamy. But both the Finance Minister Arun Jaitley and the Prime Minister Narendra Modi behaved in a responsible and dignified manner. The supporters of BJP must note that the so called ‘anti-BJP’ Media, who they often call ‘presstitutes,’ praised the attitude of the PM and the FM towards Rajan.

The Modi government and BJP wanted lower interest rate to encourage more investment which would accelerate growth and generate jobs. In the first two years of the Modi government, the inflation was quite low most of the time and that offered a great opportunity to bring down the interest rate, BJP felt. Rajan was not very convinced and he had his reasons. He felt, controlling inflation is first priority and he remained firm in his position.

Now the ‘anti-BJP’ media began to give Rajan the credit for keeping the inflation under check and for keeping the economy on track.In 2016, there were lots of speculation about Rajan’s second term. The ‘anti-BJP’ media widely circulated the certificated issued to him by some of the corporate bosses.Rajan was projected as the only competent person who can ‘protect’ the Indian economy. Thus a pressure was created to give Rajan the second term.But in the middle of the year, Raghuram Rajan decided to leave RBI and go back to the academic circle of the USA.

Thanks to the media coverage, Raghuram Rajan became a household name and he was praised by the middle class. Both the middle class, and the journalists who also come mainly from the same background,  praised Rajan for keeping inflation under control. But a month after Rajan’s decision to exit RBI, the huge pay hike for the employees of the Central Government was announced by the NDA government.Such a step has all the potential to push the prices of the commodities upwards. But this time, the same middle class, and the media, remained silent. Some even claimed that the hike was inadequate. Protests took place as well in some parts of the country.

The middle class benefits from pay hike.It also benefits from the high interest rate.That helps their savings to grow. But there are millions of people who have no surplus to deposit in their bank accounts. Does the higher interest rate help them? Are they not the part of the economy? Is the economy only constituted by the middle class and the big industrialists? What about the farmers? Those engaged in small cottage industry? Do they not contribute to the economy? Does the media care to consider their opinion regarding the desired interest rate?

The supporters of high interest rate would point out that it is the poor who are hit by inflation most. Therefore, the higher interest is justified when in the context of controlling inflation.

The first part is absolutely right. But the competent economists do not enlighten us that higher interest rate is not the only measure available to check inflation. Inflation rate is not necessarily very high in the economies with extremely low interest rate. Inflation occurs when there is too much money in the market compared to low quantity of production. Therefore, one has to increase production which requires investment. Secondly, one has to check the flow of money coming to the market. That can be done by – raising the direct tax, encouraging people to purchase bonds, acting against the hoarders, tackling black money and by removing subsidy from those who are not poor.

To be fait to Arun Jaitley, he was trying to address those issues. However, the media is extremely sensitive about the middle class. When Jaitley presented the budget in 2016, which proposed marginal increase in income tax, it was termed by a section of the media as having nothing for the middle class. One business expert termed the budget as ‘Robin Hood Budget’ – the budget which takes away from the rich and the middle class and gives it to the poor.

Undoubtedly, the focus of the economic policy should be on the poor as the Congress Vice President Rahul Gandhi repeatedly reminded the Modi Government.

One should not forget that a large section of the poor makes in India and they will continue to make in India in future. They will not transfer their capital out of the country as it is done by some big corporate bosses. But these poor people need capital at a much cheaper rate.The success of MUDRA scheme, If the claims of the Prime Minister are right, is an indicator that huge number of people are willing to start or expand their small business. If these initiatives do well, they will create a large number of low income jobs for the poor and for those who are not highly skilled. Low interest rate will definitely help them.

The importance of low interest rate is well understood by those associated with micro-finance organisations like Bandhan. Bandhan decided to become a bank to lend thousands of poor women loans at a cheaper rate. The loans given to the Self Help Groups help to reduce the dependence on the money lenders, help the poor to become producers and the extra income brings social security.Low interest rate will help thousands of Self Help Group members who belong to the weaker sections of the society.

The middle class must take a total view of the economy. In West Bengal, it criticised the State Government for not raising the Dearness Allowance for the State Government employees. The demand cannot be termed unjustified when it is compared with that of the Central Government.However, the victory of Mamata Banerjee in 2016 assembly election in West Bengal proves that it is possible to win election without appeasing the ‘opinion maker’ middle class.

So,the domination of the educated middle class on the politics is declining in India.But the welfare of the poor will raise the demand of the service sector and ultimately benefit and expand the middle class.

The middle class dominated media must notice those changes.