He has not paid heed to ‘advice of more aggressive’ cut in interest rates.

Reserve Bank of India (RBI) Governor Raghuram Rajan is facing opposition within the government and the ruling BJP to the extension of his tenure as he did not heed their calls for ‘aggressive’ rate cuts to spur the economy.

Last week, BJP leader Subramanian Swamy had opposed the extension to Dr. Rajan’s three-year term that ends in early September. Now, a senior government economist close to Prime Minister Narendra Modi, a Minister and the BJP’s affiliate, the RSS, are not in favour of Dr. Rajan, a former Chief Economist of International Monetary Fund (IMF), getting an extension.

The detractors’ argument is that Prime Minister Narendra Modi’s promise of 8 per cent-plus growth has not yet become a reality due to Dr. Rajan’s approach to interest to rate cuts. “(Dr) Rajan erred in his judgement of interest rates...food inflation cannot respond to central bank policies...he should have cut rates drastically...that would have spurred lending, investments and, therefore, growth,” the senior government economist told the media.

The final decision on Dr Rajan’s extension will be taken by Mr. Modi and Union Finance Minister Arun Jaitley.

If an extension is denied, Dr. Rajan will be the first RBI Governor since 1992 to not have a 5-year term. His four predecessors – Dr. D. Subbarao (2008-2013), Dr. Y.V. Reddy (2003-2008), Dr. Bimal Jalan (1997-2003) and Dr. C. Rangarajan (1992-1997) – had five-year terms.

Among the candidates the government could consider to replace Dr. Rajan is the Chief Economic Advisor Arvind Subramanian, who, a highly-placed government source described, is “more of a team player” than Dr. Rajan. The government appreciates though, that the Governor enjoys credibility with international investors, the source said.

“Exposure to and understanding of the complexities of the global economy are Dr. Rajan’s plus points—something the government rides on,” he said.

At the Reserve Bank, since 2013, he has successfully brought stability to the rupee and double-digit inflation under control, opened payment banks, overseen the clean-up of non-performing assets-ridden banks’ balance sheets while speaking up on a variety of issues from tolerance for dissent and an attitude of inquiry to crony capitalism. The transition to inflation-targeting has happened in his tenure and so will be the impending transfer of the central bank’s singular powers to set interest rates to a six-member monetary policy committee.

Dr. Rajan recently drew criticism from Minister of State for Commerce & Industry Nirmala Sitharaman for his description of the Indian economy as the “one-eyed king in the land of the blind.” Better words should have been used, Ms. Sitharaman had said.