Econintersect: University of Chicago professor Raghuram Rajan has been named the new head of the Reserve Bank of India for a three-year term. He succeeds Duvvuri Subbarao who has held the position for the past five years.
Rajan, 50, has a distinguished career in international banking. He has served as president of the American Finance Association and as the youngest ever (age 40) chief economist for the International Monetary Fund (IMF) and also the first non-westerner to hold that post. According to Wikipedia, he is currently serving as a visiting professor at the World Bank, the U.S. Federal Reserve Board and the Swedish Parliamentary Commission.
Rajan has recently been Chief Economic Advisor to the Government (of India) and will resign that position to assume his new duties.
Jonathan Wheatley has a six-factoid summary of Rajan’s biography at the Financial Times beyond brics blog. Among the citations (links in the Wheatley article):
- Rajan delivered a financial crisis warning speech at Jackson Hole in 2005. See Rob Minto article at the Financial Times.
- Larry Summers called Rajan a “luddite”.
- Rajan had a key role in the Charles Ferguson documentary Inside Job, an Oscar-winning documentary about the crisis, extended trailer shown below.
Rajan does not appear in this extended trailer. The complete film is available at Amazon.com.
Rajan is the author of a book Fault Lines about the subprime crisis in the U.S. which The Economist has called “superb”. In the following 7 minute video Rajan discusses the book:
What kind of governor will Rajan be? Snippets of possible characteristics and challenges can be found, but a clear total picture remains to be formed. Some of the snippets:
“… he’s independent because he doesn’t need this job. He can walk out of it if he wants.” – Meghnad Desai, professor emeritus at London School of Economics, quoted by Bloomberg.
“As RBI Governor, Raghuram Rajan is expected to be all for competition and innovation in the financial system.” – K.R. Srivats, The Hindu Business Line
“With the right policies and some luck, we will become a middle-income constitutional democracy in my lifetime. But inaction coupled with bad luck could make us an unequal oligarchy or worse, far sooner than we think.” – Rajan quoted by The Economic Times.
[Rajan] criticises cronyism and corruption and notes that “self-delusion is the first step towards disaster for individuals as well as countries.” – Postscript to the Indian edition of his book and quoted by The Economist.
“Rajan had advocated structural or supply-side reforms to improve competitiveness of the workforce to better adapt to globalization, while also supporting fiscal austerity measures (e.g., raising taxes and cutting spending).” – Wikipedia, describing a 2012 debate between Paul Krugman and Rajan.
“Rajan would preside over a banking system that has turned weak in recent years, partly due to the slowdown in economy and fall in global demand, and partly because of some promoters getting super rich at the expense of the financial system.” – K.R. Srivats, The Hindu Business Line
R.Nagasubramanian contributed sources for this article.
- Rajan tasked to fix financial faultlines (The Hindu Business Line, 06 August 2013)
- A friend of financial innovation, competition (K.R. Srivats, The Hindu Business Line, 06 August 2013)
- Raghuram Rajan (Wikipedia)
- Six things you need to know about Raghuram Rajan (Jonathan Wheatley, Financial Times, beyond brics blog, 06 August 2012)
- Rajan: in his own words (Rob Minto, Financial Times, beyond brics blog, 06 August 2012)
- From theory to practice (P.F., The Economist, 09 August 2012)
- Steep learning curve ahead for next RBI Governor Raghuram Rajan (MC Govardhana Rangan and Shaji Vikaraman, The Economic Times, 07 August 2103)
- Credit-Crisis Oracle Rajan to Head India’s Central Bank (Kartik Goyal, Bloomberg, 07 August 2013)