Chief economic adviser Raghuram G Rajan, a former International Monetary Fund (IMF) chief economist and Chicago University professor famed for his perceptive warnings about the global financial crisis of 2008, is set to take over as the new Reserve Bank of India (RBI) governor ending weeks of speculation amid looming economic uncertainties.
Official sources confirmed that the government has cleared Rajan’s appointment as the next RBI governor. He will take over on September 5.
Rajan (50), a PhD from Massachusetts Institute of Technology, has done pioneering work in the areas of banking, corporate finance, and economic development, especially the role finance plays in it.
He will take over at a time when policy makers are grappling for options to reverse the deceleration in India’s economy -- the worst in a decade -- hit by crippling industrial slowdown and a sliding rupee.
His recent book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, won the Financial Times Business Book of the Year award in 2010. He also has an earlier book co-authored with Luigi Zingales titled Saving Capitalism from the Capitalists.
Rajan will replace Subbarao, whose term will end on September 4 and had told the government a few weeks ago that he is not keen to stay on in his job.
Subbarao’s tenure has been marked by the policymakers’ dilemma to balance growth with price stability.
Subbarao, who will turn 64 next week, took over as the RBI governor on September 5 in 2008 barely ten days before the stunning collapse of Wall Street icon Lehman Brothers triggering a credit crisis that pushed the world economy into a tailspin.
It has been marked with hawkish policy stance that sometimes has evoked strong remarks from government’s economic managers.
The latter part of his term has been marked a harsh dilemma: slew of fiscal and monetary to cure inflation has not tamed prices but yet cast side effects on growth.
A sharply falling rupee has added to array of problems for the RBI governor who has, so far, withstood mounting pressure from the government and business leaders to slash lending rates.
Subbarao has presided over decisions to repeatedly raise lending rates to cool prices. He has also ushered in key reform measures including savings bank rate deregulation and the decision to issue to new bank licences.