After months of speculation, Raghuram Rajan, the Chief Economic Advisor to the Ministry of Finance, has been appointed as the next Governor of Reserve Bank of India (RBI). Rajan would succeed the incumbent D Subbarao who retires next month. Rajan, a former chief economist of the International Monetary Fund (IMF) and the Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business has been appointed for a period of three years.

Rajan is taking over the mantle of RBI Governor at a time when the economy is passing through its toughest phase since 1991. The rupee is at its lifetime low of 61.80 to a dollar, the current account deficit is widening and the growth has virtually stalled. The current governor Subbarao has been widely criticized for his refusal to ease interest rates. Private sector investments have dried up with high cost of borrowing and shrinking liquidity. However, Subbarao had long maintained that with persistently high inflation, there wasn’t much he could do. Rajan's task is likely to be doubly difficult. What helps is the fact that he has an excellent rapport with the Finance Minister. The FM and the RBI governor were often seen to be at loggerheads over interest rate action. Having served as Chidambaram's economic advisor, Rajan it is hoped will be slightly more amenable to the government’s growth concerns.

 Rajan comes to RBI with a formidable CV. He has had a distinguished academic and career track record. He was conferred on the Ph.D award from Massachusetts Institute of Technology, in May 1991 for his thesis ‘Essays on Banking’. Prior to that, he did MBA from Indian Institute of Management (Ahmedabad) in March 1987 and B.Tech (Electrical) from Indian Institute of Technology (Delhi), May 1985.

He has been the Chief Economic Advisor, Finance Ministry, Government of India since 2012. Before that he served as the Economic Advisor to the Prime Minister of India (Honorary), 2008-2012 and as the Chairman of High Level Committee on Financial Sector Reforms, India, 2007-2008.

He has also been Fischer Black Visiting Professor, M.I.T. Sloan School of Management, 2000-2001; Joseph L. Gidwitz Professor of Finance, Graduate School of Business, University of Chicago, 1997-2003; Visiting Professor of Finance, Kellogg School, Northwestern University, 1996-1997 and Bertil Danielsson Visiting Professor of Banking, Stockholm School of Economics, 1996-1997.

Rajan has authored several research papers that have been published in major economic and finance journals across the world. He has also penned well-known books. His recent book ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy’, won the ‘Financial Times Business Book of the Year’ award in 2010. Besides, he has also co-authored with Luigi Zingales a book titled ‘Saving Capitalism from the Capitalists’.

He has also been on the editorial boards of the American Economic Review and the Journal of Finance.