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Why Raghuram Rajan may be in the running for Nobel prize for Economics

Rajan’s is one of the six economists on the list of probable winners, according to Clarivate Analytics, a company that predicts Nobel winners.

india Updated: Oct 09, 2017 15:04 IST
HT Correspondent
HT Correspondent
Hindustan Times
Raghuram Rajan,Nobel Prize for Economics,Raghuram rajan Nobel prize
Raghuram Rajan, former RBI governor, at a press conference. (Hindustan Times)

Former RBI governor Raghuram Rajan’s name is doing the rounds as a probable for the Nobel Prize for Economics this year, according to Clarivate Analytics, a company that does academic and scientific research and maintains a list of dozens of possible Nobel winners based on research citations.

Rajan’s name is one of the six economists on the list of probable winners made by the firm. His name is listed along with economists Michael C Jenson and Stewart C Myers for their contributions in “illuminating the dimensions of decisions in corporate finance”. Rajan is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at the Booth School of Business, University of Chicago.

If Rajan wins, he will become the second Indian economist, after Amartya Sen in 1998, to win the Nobel in economics. He is considered one of the sharpest minds in the field of economics, and his contributions have been acknowledged and feted.

Rajan became the first non-westerner as well as the youngest at 40 to become the chief economist at the International Monetary Fund, where he served his term from 2003 to 2006. But one of the reasons Rajan is a respected name is because he was one of the few economists to predict the global financial crisis of 2008.

In 2005, Rajan had presented a paper at an international conference of bankers and economists, arguing that the financial market was headed for a downturn, and that financial instruments such as credit default swaps were risky and could prove the undoing of the economy. His views were dismissed at the time, but three years later, the prediction proved prescient.

While Rajan’s name is being bandied about, he is just one of the names on the list. According to information available on Clarivate’s website, in the last 15 years, 45 of the selected researchers had gone on to receive a Nobel -- nine in the same year in which they were tipped by Clarivate and 18 within two years of the distinction

Rajan, 54, was born in Bhopal, Madhya Pradesh. His father, R Govindarajan, was one of the first trainees of the then newly set up intelligence agency Research and Analysis Wing (RAW).

In many ways, Rajan is the product of India’s finest educational institutions. He studied at the Delhi Public School, RK Puram and then went on to get a degree in electrical engineering at the Indian Institute of Technology, Delhi, followed by a post graduate diploma from the Indian Institute of Management, Ahmedabad.

Rajan then went on to join a doctoral programme at the MIT Sloan School of management. He was awarded a PhD for his work on the banking sector.

He has served as a visiting professor at many international universities, including the Stockholm School of Economics and Kellogg School of Management , and has a long-standing association with the Indian School of Business. Since 1991, Rajan is a professor of finance at the Booth School of Business, University of Chicago.

He has long been a respected name in the field of economics. In 2003, Rajan was awarded the inaugural Fischer Black Prize by the American Finance Association for contributions to finance by an economist under 40.

But he made international headlines in September 2003 when he became the Chief Economist at the International Monetary Fund. At 40, he was the youngest person ever to be appointed to the job. In 2011, he published the acclaimed “Fault Lines” on how hidden financial fractures threaten the world economy.

In 2008, under the Manmohan Singh-led UPA government, Rajan was made an honorary economic advisor to the government. In 2012, he became the chief economic advisor to India’s ministry of finance, succeeding Kaushik Basu.

Rajan’s appointment as the 23rd governor of the Reserve Bank of India in 2013, was the next step in his career. Rajan became the second youngest governor after Manmohan Singh, who took charge when he was 10 days short of his 50th birthday. His three-year stint at the RBI was marked by reforms in the banking sector coupled with a sustained push to curb inflation. But Rajan’s blunt, vocal style also garnered him media attention.

In 2016, Rajan announced that he won’t be serving a second term as RBI governor. Speculation suggested that Rajan was not offered an extension like his predecessors due to his significant differences with the ruling NDA government, especially on demonetisation.

Exactly a year after his term ended, Rajan published a book titled “I Do What I Do” -- a reference to his famous quote at an earlier press conference -- describing what it was like to helm India’s central bank during those “turbulent times”.

Rajan’s book received a lot of press, especially since this was the first time the former RBI governor aired his opinion on demonetisation, saying that the government’s policy could have long-term benefits but its short-term economic costs would outweigh them.