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.