Raghuram Rajan takes over from Subbarao at RBI

Raghuram Rajan became the 23rd governor of the Reserve Bank of India on Wednesday.

Rajan, 50, an economics professor who also served as chief economist at the International Monetary Fund, took charge from D Subbarao.

The duo shook hands warmly and hugged after Rajan signed papers taking over as the governor of the central bank.

"Ten minutes ago, I handed over charge to Raghuram Rajan," Subbarao said after stepping out of Mint Road.

"The country could not have asked for a more capable person to lead the RBI in these most difficult times." 

Rajan is taking over the top job at a time when the Indian economy is going through difficult times. 

Declining value of the rupee, widening current account deficit and the impact of likely tapering of US bond purchases are some of the key issues that will keep him busy.

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Based on his track record, India Inc. feels that he would be able to rescue the economy despite the challenges. Rajan, who has been in the Finance Ministry as the Chief Economic Advisor for barely a year, replaces Duvvuri Subbarao as the Governor.

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Besides combating the key issues like volatile rupee and CAD, Rajan will have to take a call on continuing with RBI's practice of mid-quarter policy review every 45 days, which was initiated by Subbarao.

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There has been speculation that Rajan is not in favour of mid-quarter reviews and could dispense with the practice, although the scheduled mid-quarter review due later in the month would be brought out.

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Rajan, a former IMF chief economist, was appointed as the Chief Economic Advisor in the Finance Ministry in August last year.

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His appointment comes at a challenging time, when the economy is battling industrial slowdown, declining rupee, rising prices and all-time high CAD. As regards the Current Account Deficit, there has been some signs of improvement in the first quarter mainly on account of decline in gold imports. (Text courtesy, PTI)