Raghuram Rajan
Chief Economic Advisor Raghuram G Rajan, who as IMF economist had predicted the 2008 global crisis, was today appointed the new RBI Governor. Rajan, 50, will succeed D Subbarao, who by his hawkish policy stood his ground on continuing with a tight monetary policy despite repeated entreaties from the government to ease interest rates to boost growth. Subbarao will demit office on September 4. "Prime Minister Manmohan Singh has approved the appointment of Dr. Raghuram Rajan as the Governor of Reserve Bank of India (RBI) for a term of three years, vice Dr. D. Subbarao upon completion of his (Dr. Subbarao's) tenure," an official release said. Rajan, a former IMF chief economist, was appointed as the Chief Economic Advisor in the Finance Ministry in August last year. His appointment as the 23rd central bank chief comes at a challenging time, when the economy is battling industrial slowdown, declining rupee, rising prices and all-time high current account deficit (CAD).
Known for his frank views,
Rajan was acclaimed for predicting the 2008 global financial crisis. In 2005,
Rajan had delivered a lecture severely critical of the financial sector and
argued that a financial disaster might be looming. Rajan, who was honorary
economic advisor to the Prime Minister earlier, is an alumni of IIM-Ahmedabad
and IIT-Delhi. He had replaced Kaushik Basu as Chief Economic Advisor in the
Finance Ministry last year. He did his doctorate from the Massachusetts Institute
of Technology. He was professor at the University of Chicago's Booth School of
Business before taking over as CEA. Rajan was also involved with the report on
Financial Sector Reforms, which was authorised by the Planning Commission. His
appointment was generally welcomed by economic administrators and the industry.
"Rajan will make an excellent Governor at the moment" as he has been
dealing with the problems in the last one year, said C Rangarajan, Chairman of
the Prime Minister's Economic Advisory Council (PMEAC) and a former RBI
Governor. Planning Commission Deputy Chairman Montek Singh Ahluwalia said Rajan
was coming in at a tough time but he has a terrific academic and professional
background. "It's a very tough time, we need someone who can give direction...the
important thing is giving leadership for the next five years on how should the
Indian financial system move. I think Rajan will be the best person to do
that," he said. Adi Godrej, industrialist and former CII president,
welcomed Rajan's appointment, saying his experience globally and as CEA in the
government would stand him in good stead.
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