Raguram Rajan to be new RBI governor
He will succeed D Subbarao
whose term ends on September 5
There were two other contenders -- economic
affairs secretary Arvind Mayaram and Planning Commission member Saumitra
Chaudhuri.
Rajan will replace D Subbarao, who
completes his five-year term on September 4, and will be the 23rd Governor of
the central bank. "Prime Minister Manmohan Singh has approved appointment
of Raghuram Rajan as Governor of RBI for a term of three years," an
official statement said.
Rajan, a former IMF chief economist, was
appointed as the Chief Economic Advisor in the Finance Ministry in August last
year.Known for his frank views, Rajan was also honorary economic advisor to the
Prime Minister. He was acclaimed for predicting the 2008 global financial
crisis.
An alumni of IIM-Ahmedabad and IIT-Delhi,
Rajan 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.
The former IMF chief economist had emerged
as the key pointsman for Finance minister P Chidambaram, dealing with issues as
diverse as a new development index to calm down nerves in the markets.
Apart from a sound understanding of the
economic and financial system, what also works in favour of Rajan is his
familiarity with key players in the global economic system, especially in
uncertain times like at present. Besides, he is expected to get new ideas into
RBI, which many on Raisina Hill believe is too conservative.
At the same time, a professional economist
like Rajan is expected to take an independent view of applicants for bank
licences and not act under the finance ministry's pressure. Rajan's appointment
comes at a time when the economy is struggling with a high Current Account
Deficit (CAD) and a depreciating rupee.
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