Raghuram G Rajan, a former International Monetary Fund (IMF) chief economist who is currently employed as professor at Chicago University, is set to take over as India's new chief economic advisor. The 49-year-old economist had achieved fame for his perceptive warning on the global financial crisis of 2008.
Rajan will replace Kaushik Basu, whose term ended on July 31. Basu will return to Cornell University, so he could don his academic robes once again. He has been on leave from the university since 2009, where he is employed as a professor of economics and the C. Marks professor of International Studies.
Official sources confirmed that the government has cleared Rajan's appointment, and a formal order will be issued shortly. They, however, did not comment on the likely tenure for Rajan or the date on which would assume his new role.
Such assignments usually have a three-year tenure.
Rajan (49), a PhD from the Massachusetts Institute of Technology, has done pioneering work in the areas of banking, corporate finance and economic development. He is taking over at a time when policy makers are grappling for options to reverse the deceleration in India's economy due to the crippling industrial slowdown.
An honorary advisor to Prime Minister Manmohan Singh, he is known for his outspoken views on India's economic management. He had also chaired a high-level committee on financial sector reforms in India.
Rajan is of the view that immediate steps need to be taken on key aspects of second-generation reforms, such as raising the retail prices of fuel, besides deregulating and aligning them with international crude price movements.
Many expect Rajan, who studied at IIT Delhi and IIM Ahmedabad, to help finance minister P Chidambaram guide the country out of its current economic crisis. Rajan is expected to frame policies on the unfinished reforms agenda — most of which Chidambaram had unveiled in his stint as the finance minister in UPA-I between 2004-08.
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 had also co-authored a book with Luigi Zingales, titled Saving Capitalism From The Capitalists.