Why is everyone going gaga over Raghuram Rajan ?

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Raguram Rajan has taken over from Subbaro as the Governer of the Reserve Bank fo India. But did you know why is India going gaga over him.. atleast the media is…. Simply because this man is too good to be true!

He graduated from the Indian Institute of Technology, Delhi (won the Director’s Gold Medal for best all-round achievement) in 1985 with a bachelor’s degree in Electrical Engineering, and completed the Post Graduate Diploma in Business Administration at the Indian Institute of Management, Ahmedabad (gold medalist) in 1987. He received a PhD in management from the Massachusetts Institute of Technology in 1991 for his thesis titled “Essays on Banking”.

He joined the Booth School of Business at the University of Chicago after graduation. His accolades include

  • Youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (October 2003 to December 2006)
  • Inaugural recipient of the Fischer Black Prize awarded by the American Finance Association for contributions to the theory and practice of finance by an economist under age 40 (2003).
  • Awarded the 5th Deutsche Bank Prize in Financial Economics for highly influential contributions in a remarkably broad range of areas in financial economics by Center for Financial Studies.

But this is not it. What Rajan has best to his credit is prediction of the 2008 mortgage crisis way before it happened. In 2005, at a celebration honoring Alan Greenspan, who was about to retire as chairman of the US Federal Reserve, Rajan delivered a controversial paper that was critical of the financial sector. In that paper, “Has Financial Development Made the World Riskier?”, he argued that a “disaster might loom.”

Back then, people were not very kind to his “seemingly impractical” claims. For instance, former U.S. Treasury Secretary and former Harvard President Lawrence Summers called the warnings “misguided” and Rajan himself a “luddite”. However, following the 2008 economic crisis, his views came to be seen as prescient. In fact, he was extensively interviewed on the global crisis for the Academy Award winning documentary film Inside Job.

Since November 2008, Rajan has been actively involved in Indian economy, playing a variety of important roles, including the honorary economic adviser to the Planning Commission, Chief Economic Adviser to the Ministry of Finance and now RBI Governor, for a period of three years.

He is a suave, unflappable economist who took office at a time when Indian economy is facing a big crisis. Keen to lower unrealistic hopes of what he can achieve, Mr. Rajan has stressed that he has no “magic wand” to solve India’s multiple economic ills. The country has the world’s third-largest current account deficit of about $90 billion, high inflation and an economy projected by private economists to grow at about 4 per cent this fiscal year, half the rate it was in 2008. But it is acknowledged that like his predecessor, he would likely try to assert his independence. This can be evidenced from the fact that before becoming Mr. Chidambaram’s adviser, it was reported that Mr. Rajan was sharply critical of the government for failing to drive ahead with economic reforms.

Amidst all the challenges that lay ahead of him, he continues to radiate a strong sentiment of hope. May the force be with him!

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