Prime Minister Narendra Modi
Prime Minister Narendra ModiReuters

RBI Governor Raghuram Rajan is starting to be acclimatized to Prime Minister Narendra Modi's determined and rapid vision of development.

Modi's punch line "minimum government and maximum governance'' has won the hearts of millions, and his 100-day agenda to fix issues has captured the imagination of many.

Rajan has the experience of working with former finance minister P Chidambaram, when he took over as RBI Governor but not with the new finance minister Arun Jaitley, 62, a corporate lawyer.

Consumer price index (CPI) will rise up in the coming weeks, and this can be the reason for conflict between the RBI Governor and the NDA-led government.

"Rajan is making things difficult for the government by publicly speaking about RBI's stance on the CPI inflation. He would not find it easy to backtrack even if he wants to adjust with the new government," Reuters quoted a senior finance ministry official.

On Tuesday, after the meeting with Jaitley, Rajan had announced that fighting inflation will continue to be the priority.

The Modi effect was witnessed on the Election Day as the stock market surged. So, investors and voters are now looking up to the Prime Minister and Rajan to push up India's declining economy.

''The Modi-Rajan equation reminds us of that between Volcker and Reagan, where it was a combination of the central banker's inflation-fighting cred and the latter's charismatic image," said Philippe Jauer, chief investment officer at fund manager Amundi Singapore.

Rajan, 51, has proved to be feasible. He had predicted financial crisis before it struck the US in 2007. A few days after his appointment back in November, the benchmark of the Bombay and National Stock exchange surged.

The Congress-led finance ministry had not been without friction with the RBI till the 2014 Lok Sabha elections. The UPA-led government faced criticism as the Rupee declined frequently.

Rajan had to bring back stability in the market by draining away liquidity. Due to positive outcome, he was applauded by many news organisations and experts.

'Rajan rally' and 'Rajan effect' were some of the eye-catching headlines. But he could not manage to retain the economic stability during the UPA-led government.

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