Raghuram Rajan: Backing India’s Dream to Reach for the Stars

According to a report in CNN IBNLive, published on January 13, 2015, Raghuram Rajan the Governor of the Reserve Bank of India (RBI), was named the “Governor of the Year 2015”, at the Central Banking Awards, initiated by a British magazine.

Mr Rajan’s understanding of the Indian economic situation caused him to tackle these issues at a basic level, through his impressive leadership. During his current tenure as governor, he follows a focused and disciplined methodology. He uses the platform of the RBI to steadily guide the economy on a positive course.

Although there is much left to be accomplished during his tenure as Governor, one cannot overlook the robust growth and strength of the Indian economy. As an economist at heart, he was amongst the few who actually challenged the US Financial System, predicting the financial crisis of 2008. And, it is with this economist spirit that he guides India.

Early Life and Education

Mr Rajan hails from Bhopal, India; where he was born in 1963. With a flair for education right from primary school, he completed his higher education at the Indian Institute of Technology (IIT), Delhi, from where he secured his degree in electrical engineering. Following this, he completed his MBA from the Indian Institute of Management, Ahmedabad (IIMA). In 1991, he completed his PhD in Economics, from the Massachusetts Institute of Technology (MIT); where his thesis was based on banking.

Career

His career began at Chicago University, where he joined as an assistant professor. His life as a professor also took him to the Stockholm School of Economics and Kellogg School in Northwestern University, to name a few.

The Americans acknowledged his spark of knowledge, and in 2003 he became the Economic Counselor and Director of Research of the International Monetary Fund. The American Finance Association recognised his contribution to finance and he was awarded the Fischer Black Prize in 2003.

His critical and analytical thoughts were what brought him to India, where he was named Chairman of the Government’s Committee on Financial Sector Reforms in 2008. Dr Manmohan Singh (who was the Prime Minister at the time) also appointed Rajan as the economic adviser to the Government of India on an honorary basis.

In August 2012, he was appointed as Chief Economic Adviser to the Government of India. Owing to his channelled spirit, he was appointed as the RBI Governor on September 4, 2013, to serve a term of three years.

Contributions and Economic Stand

At a celebration honouring the contribution of Alan Greenspan (then Chairman of the US Federal Reserve) in 2005, Rajan presented a powerful paper titled “Has Financial Development Made the World Riskier?” He questioned the working of the sector and foretold the adverse consequences that the US economy might have to deal with. While many did not take him seriously; he was amongst the few that the Federal Government turned to when disaster brought the economy to a standstill in 2008.

The zeal and passion he showed on that fateful day in 2005 is what he mirrored when he took over as RBI Governor in 2013. This period was a time when the Indian rupee was falling dramatically against the dollar; and foreign investors were fleeing from the Indian scene. Engineering a series of time-bound initiatives and monetary policies, he was able to tackle bad debts and promoter malfeasance. Firm measures were instated to address the stock market volatility and to re-instil the confidence of the investor. Through his methods, Rajan changed the way the RBI functioned. His regulatory process was in sync with free market thinking as well. He vowed not to dilute the economic freedom of the entrepreneurs.

In just under three months, the economy sprung back. The rupee jumped from a low of Rs 68 to the dollar to Rs 61. Foreign investment flowed in and the equity market took a bullish turn. According to an article in The Economic Times, published in March 2015, Rajan is the unsung hero of the Indian financial market, and rightly so!