5
things to know about Mr. Raghuram Rajan:
1.
IIT Delhi, IIM Ahmedabad and Phd from MIT after a thesis on the banking sector.
2.
He was the Economic Counselor and Director of Research at the IMF from 2003
till 2007.
3.
He served as the honorary economic adviser to Prime Minister Manmohan Singh in
2008.
4.
In 2012, he was appointed as the Chief Economic Adviser to the Finance
Ministry.
5.
In Fault Lines, he argues that serious flaws in the economy are also to blame,
and warns that a potentially more devastating crisis awaits us if they aren't
fixed.
Mr.
Raghuram Rajan at work:
He
said RBI should focus on inflation, and warned that by trying to manage the
exchange rate and growth too, the central bank risked not undertaking either of
the tasks successfully. This was submitted in the report submitted by him to
the Planning Commission.
His
first speech as the RBI Governor had many interesting points:
1.
His emphasized on preserving the purchasing power of the rupee, both external
and internal, has dual implications. One being the emphasis on containing
inflation. Monetary stability means low and stable
expectations of inflation and the aim is to move towards some form of inflation
targeting. (Growth for him means financial inclusion). Other reference is by
raising the overseas borrowing limits from 50% to 100% for banks and the
special concessional swap window FCNR (B) deposits will give confidence to
banks. These measures should help the INR.
2.
He is in favor of the creation of new banks, which should increase competition
and improve efficiencies within the sector, bringing down the very high margins
that banks enjoy. Improving the recovery system by focusing
on efficiency and fairness and yet coming down hard on the
mismanagement and fraud.
3.
He focused on liberalization as the key and would take steps with government
and the regulators to liberalize the markets.
4. Specific
Actions for Households:
Firstly,
issuance of Inflation Indexed Savings Certificates linked to the CPI New Index
to retail investors. Secondly, improving the payment system for
households through the use of technology and states – “We want to make payments
anywhere anytime a reality.” Even mentions the possibility of the mobile based
payment systems.
5.
Finally quotes a line from my favorite poem - 'IF' by Rudyard
Kipling.
