Chief economic adviser Raghuram Rajan will be the new governor of the Reserve Bank. At 50, he will one of the RBI’s youngest governors when he takes charge on September 5. His appointment is for three years.
It will be interesting to see if Dr Rajan’s appointment will lead to a more amicable relationship between North Block and Mint Street in an election year. Incumbent RBI governor D. Subbarao’s views, particularly on interest rates, were not always in tune with the finance ministry.
Soon after his name was announced, Dr Rajan said the government and the RBI will work together to address challenges facing the Indian economy. “We don’t have a magic wand to make the problems disappear. But we will absolutely deal with them,” he said.
What gives industry hope is that Dr Rajan, an globally-reputed economist, had accurately predicted the global financial crisis of 2008-09 way back in 2005.