Eminent economist and chief economic adviser Raghuram Rajan said that no one can have any doubt about the country’s promise.
He noted that RBI is a great institution with a tradition of integrity, independence and professionalism. Prime Minister has approved the appointment of Dr Rajan as RBI governor for a term of three years.
His immediate challenges will be to pep up the Indian Rupee which is at record low against the demand of industry to cut interest rates to boost the grow and high current account deficit among others.
However, what gives hope to industry is Dr Rajan reputation as an economist, who in 2005 predicted the global financial crisis.
Mr Rajan famously presented a paper in August 2005 on How Financial Development Made The World Risky in a gathering to honour 20th-century economic policy giant Alan Greenspan, who was about to retire as Federal Reserve chairman. Though at that time he was criticised and even branded as anti-market, the financial crisis that unwounded in 2008 proved Mr Rajan right. “We hope that given Dr. Rajan’s experience and knowledge of markets we will see the RBI working in conjunction with the government in creating an environment that will foster growth, generate employment and keep inflation at moderate levels,” said Naina Lal Kidwai, president, Ficci. The rupee which had hit a record low of 61.80 on Tuesday recovered among others factors due to the news of appointment of Dr Rajan which raised hopes of a new approach to currency management, according to a report by Reuters.
He was appointed as the Chief Economic Advisor in the Finance Ministry in August last year. Earlier Mr Rajan had been honorary economic adviser to Prime Minister Manmohan Singh.