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Raghuram Rajan appointed as next RBI governor.

Sachin=GOD

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Sachin=GOD Newbie

Sachin=GOD

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Press Trust of India ‏@PTI_News Raghuram Rajan appointed as next RBI governor.
He is currently the Chief Economic Advisor to the PM. He formerly served as the president of the American Finance Association and was the chief economist of the International Monetary Fund (IMF). Very intelligent guy but will he stand up to the Govt. as Subbarao did in these last few months...
Clarke Mentor

Clarke

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He's one of the best brains around. Unfortunately, our problems are much bigger than what he could work with i.e. tinkering fiscal policy.

Detonator Newbie

Detonator

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A Conversation With: Chief Economic Adviser Raghuram G. Rajan By VIKAS BAJAJ

Courtesy of Indian School of Business (ISB) Raghuram G. Rajan, making a speech at Indian School of Business in April.Raghuram Rajan, whom I profiled in a recent story for The New York Times, took over as the chief economic adviser in India’s Finance Ministry last month. He has long been an adviser to Prime Minister Manmohan Singh, and he is known in global economic policy circles for a paper he wrote on the growing risks in the financial system years before the collapse of Lehman Brothers, and for his work at the International Monetary Fund, where he was chief economist. Mr. Rajan is the son of a former Indian diplomat and spent his early childhood abroad. He is a graduate of the Indian Institute of Technology, New Delhi; the Indian Institute of Management, Ahmedabad; and the Massachusetts Institute of Technology. We spoke about the state of the Indian economy; why he chose to return to the country now, after spending much of his professional career in the United States; and his fluency in Tamil, the language of his family, and Hindi. Q.You have recently returned to India at a time when the government seems to have suddenly woken up to a sharply slowing economy. Where do things stand and where are things going? A.One of the things that foreign investors, and even domestic investors, tend to be mistaken about India is they get overly euphoric for a while and then they get overly pessimistic. You have to remember that this a country of 1.2 billion and it has its own dynamic, and it moves according to whatever evolves. But the underlying fundamentals over the medium term for a country like this are obvious to see. In terms of where will growth come from, it doesn’t need to come from fancy stuff like extraordinary innovation of one kind or another. Just getting people from agriculture into services and industry itself is growth. Second, the economic establishment in this country fully understands what needs to be done. The prime minister is one of the few Ph.D. economists running a country. He has been clear on what needs to be done. And of course the new finance minister has been the old finance minister, and the older, older finance minister, and so he has a good sense [of what needs to be done]. It wasn’t for want of knowledge on what needed to be done that India slowed down. It was obviously because of lack of political, sort of, will. And I think that to some extent, when things were going swimmingly well, which they were till a year ago, you are growing at 8 to 9 percent, sometimes at 10, why would you think that you need to do more? You can focus on the other things that are more palatable to the population. Q.Why did you want to come back to India now? A.A part of it was when the call comes, it’s very hard to say no. You feel that you have some duty towards the country. I feel I owe something to the country. Also, I think the chance of even having some small influence that helps, that is multiplied by 1.2 billion lives, it’s such an immense opportunity and, of course, could be extremely rewarding if you can do even a small bit. You don’t have to have a grand vision of turning things around, and I think that is sort of the recipe for frustration. Q.In a speech you gave at the Indian School of Business in April, you said that Indian policy makers can often be hostile to new ideas and advice from outside experts. Do you feel that has changed or do you still feel that resistance? A.I think it varies by people. Some people are quite confident, and I think the willingness to listen is really a matter of confidence. You can’t be so superconfident in your abilities that you ignore what others say, and you can’t be so diffident in your abilities that you think that if they say something, you will be so taken in that you will do the wrong thing. When you are confident about your abilities and also fully aware of what you don’t know you are willing to listen to outside experts with the full sense that if you don’t find it worthwhile you will ignore it. Q.What are the two or three big things that you want to focus on while you are in this job? A.I have to say these things are a team effort right from the top, with the central figures being the prime minister and the finance minister. But I do want to participate in this process of doing what I can to put India back on the strong-growth path, and I think that’s something that can be done. That turnaround, whatever and whenever that happens, would be very, very satisfying for me. On a more direct scale, two areas that I think we could do a lot more: one is improving our financial markets and financial institutions, which is my pet interest. And I think there is a lot that we can do that doesn’t need to be grand but small, small changes that can make an enormous difference. And the second is, I think India’s medium-term future is moving people out of agriculture into industry and services. Services, you know, some extent we have a sort of a sense of what it takes. And India’s service sector is disproportionately large for a country of its income. Where we have had less success is industry, and the question is can we sort of find a way to free the path for small and medium industry, and not just keep them forever as small and medium industries but allow them to grow into large industries. So in other words, let’s move away from small and medium-sized industry preferences, regulations that primarily target large industry, and move to more seamless regulation and also reduce the transaction costs of setting up these businesses and growing them. What buttons can be pressed to make it much more attractive to do business in India? What are the permissions that we can cut down? Apart from fixing infrastructure, which everybody understands needs to be done, we are in the process of trying to increase the pace; there is also the issue of just clearing the way for entrepreneurship or, broadly, enterprise in India, and if we can do some of that, I think that could be a big win. Q.Many analysts say you are the leading candidate to become the governor of the Reserve Bank of India next year when Duvvuri Subbarao, the current governor, retires. What do you think about that? A.Hypothetical, and basically right now the challenges inside the real economy are really the most important things to focus on. Anywhere, what you want to focus on is the here and now. And the here and now is so important for getting our growth back on track. The monetary side is important, of course — there is the inflation issue to deal with, there is the financial sector liberalization — but I think the real sector, in my mind, is the single most important thing right now. I don’t think about hypotheticals. Q.Do you and the finance minister, Palaniappan Chidambaram, speak to each other in Tamil? A.I don’t think he wants to try my Tamil out. My speaking is pretty rusty. I did learn how to read and write, but I don’t want to venture to speak, especially on economic matters. I am a 10th class pass in Hindi; from 7th grade to 12th grade, I was in Delhi; before that, I was abroad. I came in not knowing a word of Hindi in 7th grade and learned Hindi and passed the exam in 10th. I think I was north of 50 percent, so I feel very proud of that accomplishment. I remember mugging up lots of long words to impress the examiner. But I want to develop to a point where I can give a working interview in Hindi. I can understand the questions perfectly but not the terminology – English words for fiscal deficit, which would be pretty unusual in Hindi. Hopefully, by the end of the year I will have some knowledge of that kind of stuff. (This interview has been lightly edited and condensed.)
Looks like a very good choice :hatsoff: http://india.blogs.nytimes.com/2012/10/06/a-conversation-with-chief-economic-adviser-raghuram-g-rajan/
Sachin=GOD Newbie

Sachin=GOD

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Last governor was the worst in India's history. This guy is brilliant.
IMO its way too early to judge his tenure. Just 10 days after he became the Governor, Lehman Brothers collapsed and he had to bear the full brunt of the Global Financial Crisis immediately after joining and I think it will be fair to say that the RBI under him did a good job during that period. Earlier most of the RBI Governors faield to maintain their independence in the face of pressure from the Central govt but Subbarao always stood up to them and held his views - although, we can say in hindsight that his decision of not decreasing the rates substantially may not have been the best one. Also, I think the conflict between Chidambaram and Subbrao led to a lot of problems - Chidambaram, as is usual with members of the Govt, tried to control the RBI Gov. and tried to influence his policy decisions but Subbrao, unlike many of his predecessors, refused to toe the line. Then a few days ago he increased the rates to slow down the rupee's slide. Whether this action will have an effect will be seen in the weeks ahead.
arun81 Newbie

arun81

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It looks like this guy was briefly or is an American Citizen.... Coming from IMF, educated at Chicago(Rockfeller) He seemed to have been picked by MMS for a reason... Hope India is not completely asset stripped and Rupee reaching 75-80 a $

ravishingravi Grand Master

ravishingravi

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"Raghuram Rajan might have won the intellectual debate with his likely US counterpart Lawrence Summers who termed his 2005 prediction of the financial crisis "luddite", but he will find navigating India's bureaucracy and resisting the government a lot tougher. In an era when the credibility of almost every institution here has been eroded, Rajan has the unenviable task of leaning against the government to protect India's central bank. Despite its flaws, the RBI is still seen as an institution that is uncompromising — be it with interest rates, banking regulation, currency or even bank licences. Rajan, who will be India's youngest central bank governor, will take over at a time when the communication between the government and Mint Street's top man has almost broken down. Only a rupee collapse helped a patch up. Finance minister Chidambaram and Governor Subbarao have had public spats in the past few months, which has not helped anyone's cause. The foremost task is to be on the same page, but that will be inviting trouble for Rajan's credibility if the government continues with its imprudent policies. "Rajan has strong and uncompromising intellectual standards, but is pragmatic in his approach to the practical challenges of policymaking,'' says Eswar Prasad, Tolani Senior Professor of Trade Policy at Cornell University and Senior Fellow at the Brookings Institution, who has co-authored research papers with Rajan. "His understanding of financial markets and macroeconomics, along with their international dimensions, make him an ideal choice to head the RBI.'' What's on the table? Bank licences and the government's perceived effort to usurp RBI's authority by providing executive powers to the Financial Stability and Development Council. Subbarao and his predecessor YV Reddy — the master bureaucrats that they were — pushed back in their own way. Purists may expect the same from Raja. There is near unanimity (a rarity among economists) when it comes to Rajan's ability and knowledge of economic difficulties of the country and what needs to be done to fix them. But where he will be tested is in navigating the RBI bureaucracy and also in maintaining the fine balance with the government. Indeed, Rajan has been warning Indian policy makers well before the Indian crisis began. Though he was abroad for the best part of his professional life, he was no less informed on what's plaguing India. On the disproportionate number of billionaires in India, Rajan in a 2008 speech at the Bombay Chamber of Commerce said, "I do want to argue that the numbers are alarming — too many people have gotten too rich based on their proximity to the government. If Russia is an oligarchy, how long can we resist calling India one?'' Rajan is too aware of the attitude of civil servants, investors and politicians in taking for granted the great India growth story. "I see signs of complacency, whether it be a lazy acceptance of straight line extrapolations by Goldman Sachs indicating that India is destined to become a great economic power, or the willingness of some Indian corporations to pay unconscionable prices in making trophy foreign acquisitions,'' Rajan told an audience at the Forum of Free Enterprise in January 2006. "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.'' Prime Minister Manmohan Singh did not face any battle with the finance ministry this time as Chidambaram, too, backed Rajan. But the new governor should be mindful of the fact that expectations were high from the government when Subbarao was appointed. A year later, the script went awry and hopes were belied. With a poll-bound government, Rajan's learning curve will be relatively short. If the India story needed a fresh salesman in the international markets whom investors would trust, it has that in Rajan. But the flip side of that is if he does not enjoy reasonable autonomy, he could choose an assignment anywhere, a choice his predecessors did not have. Be it the credit crisis, or India's economic woes, Rajan has seen them years ahead. Rajan may do well to remember his predecessor's golden words that being the head of a central bank "is a lonely job". The man & his mind: RBI Governor designate's views on various issues Central bank intervention (April '08) We are suggesting that the RBI stop intervening heavily in currency markets, something we believe has limited effects on the exchange rate in the medium run, and risks sparking inflation. Many who advocate continued heavy intervention are living in the past, when it may have worked. Foreign investment in bond market (April '08) One should take a holistic view. If the government borrowed much more in foreign currency, there would be causes to be worried. By contrast, if we allow foreigners into the long-term domestic currency markets, there is far less concern — the government will never be forced to default on domestic currency debt. Also, we free financial institutions to make loans instead of holding government paper. Foreign banks (April '08) India stands to gain from the services provided by foreign banks, especially as it becomes integrated with the world economy. Much as the Indian public has benefited from our unilateral reduction in trade barriers, it will benefit from the services provided by foreign banks. Branch licensing (April '08) We do recommend freeing up branch licensing for domestic banks. Following the principle of domestic treatment, that privilege should also be extended to foreign banks after a short period (to allow domestic banks to gear up). Labour laws (September '08) We need more flexibility in the labour market, especially in low-skilled industries like textiles, else our factories will either become fully automated, or full of temporary workers. In protecting some workers, we condemn the majority to a totally unprotected existence, an example of the law of unintended consequences. Predicting the global financial crisis (February 2013) At any point in time there are a whole bunch of crazy people saying the world is coming to an end. That is the problem regulators [like Greenspan] face. I would say from the perspective of the regulator, I was one of the crazies On Bhagwati-Sen Rivalry(February 2013) There is an old saying: when two elephants are fighting, get out of the way" http://economictimes.indiatimes.com/news/economy/policy/steep-learning-curve-ahead-for-next-rbi-governor-raghuram-rajan/articleshow/21665204.cms?curpg=2

surajmal Newbie

surajmal

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Cosmetic only. RBI can't do much when cancer has metastasised to the extent that it has. Basically, all the crap I'm reading is predicting doom and gloom for Indian economy for the next couple of years atleast. India missed its window. Imagine what 10% YOY growth over the last decade would have done setting up the future. Look in the mirror time.

diga Grand Master

diga

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Is this appointment a forerunner of the events to unfold? Tapering of Fed Stimulus,another Recession,collapse of India/China economies

Sachin=GOD Newbie

Sachin=GOD

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Is this appointment a forerunner of the events to unfold? Tapering of Fed Stimulus' date='another Recession,collapse of India/China economies[/quote'] Nah. Right now he simply looks like the best qualified for the job so got it. Will be really interesting to see how he handles the political pressures that come with this job.
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