Raghuram Rajan

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Raghuram Rajan
Raghuram Rajan, IMF 69MS040421048l.jpg
Dr Raghuram G Rajan in 2004
23rd Governor of Reserve Bank of India
Assumed office
4 September 2013
Preceded by Dr D Subbarao
Personal details
Born (1963-02-03) 3 February 1963 (age 52)
Bhopal, Madhya Pradesh
Nationality Indian [1]
Spouse(s) Radhika Puri
Alma mater Delhi Public School, RK Puram
IIT Delhi (B Tech)
IIM Ahmedabad (MBA)
MIT Sloan School of Management (PhD)

Raghuram Govind Rajan (born 3 February 1963) is the current and the 23rd Governor of the Reserve Bank of India, having taken charge of India's central banking institution on 4 September 2013, and succeeding Duvvuri Subbarao. Rajan was chief economic adviser to India's Ministry of Finance during the previous year and chief economist at the International Monetary Fund from 2003 to 2007. He is on leave of absence as a professor of finance at the graduate business school at the University of Chicago.[2]


Raghuram Rajan was born 1963 in Bhopal, Madhya Pradesh[3] in a Tamil family[4] and his father was a senior officer in the Intelligence Bureau (India).[5] He did his schooling from 7th to 12th standard in Delhi Public School, RK Puram[6] and graduated from the Indian Institute of Technology, Delhi with a bachelor's degree in electrical engineering in 1985, after which he acquired a Post Graduate Diploma in Business Administration from the Indian Institute of Management Ahmedabad in 1987. He won Director's Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad. He received a PhD in Management from the MIT Sloan School of Management in 1991 for his thesis titled "Essays on Banking".[7]


After graduation, Rajan joined the Booth School of Business at the University of Chicago. He was the Chief Economist at the International Monetary Fund (IMF) from October 2003 to December 2006. Rajan’s research interests are in banking, corporate finance, and economic development, especially the role finance plays in it. He co-authored Saving Capitalism from the Capitalists with Luigi Zingales in 2003. He wrote Fault Lines: How Hidden Fractures Still Threaten the World Economy in 2010, for which he was awarded the Financial Times-Goldman Sachs prize for best business book that same year.[8]

Rajan is a member of the Group of Thirty. He was the President of the American Finance Association in 2011 and is a member of the American Academy of Arts and Sciences. In November 2008, Indian Prime Minister Dr Manmohan Singh appointed Rajan as an honorary economic adviser. That same year, a high-level committee on financial reforms, headed by Rajan, submitted its final report to the Planning Commission.[9]

Replacing Kaushik Basu, Rajan was appointed as Chief Economic Adviser to the Government of India on 10 August 2012.[10] He also prepared the Economic Survey for India for the year 2012–13, on 27 February. On 6 August 2013 it was announced that Rajan would take over as the next RBI Governor.[11] He was appointed RBI Governor for a term of 3 years succeeding Duvvuri Subbarao whose term ended on 4 September 2013.

In 2014 it was suggested that Rajan could take over from Christine Lagarde as head of the IMF when Lagarde steps down in 2016.[12]

Economic and political views[edit]

Rajan advocates giving financial markets a greater role in the economy. In the book Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity[13] co-authored with Luigi Zingales, the two authors argue in favour of deregulated financial markets in order to facilitate access of the poor to finance: "Capitalism, or more precisely, the free market system, is the most effective way to organise production and distribution that human beings have found … healthy and competitive financial markets are an extraordinarily effective tool in spreading opportunity and fighting poverty. …Without vibrant, innovative financial markets, economies would ossify and decline." (p  1)

In 2005, at a celebration honouring Alan Greenspan, who was about to retire as chairman of the US Federal Reserve, Rajan delivered a controversial paper that was critical of the financial sector.[14] In that paper, "Has Financial Development Made the World Riskier?", Rajan "argued that disaster might loom."[15] Rajan argued that financial sector managers were encouraged to "take risks that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time. These risks are known as tail risks. But perhaps the most important concern is whether banks will be able to provide liquidity to financial markets so that if the tail risk does materialise, financial positions can be unwound and losses allocated so that the consequences to the real economy are minimised."

The response to Rajan's paper at the time was negative. For example, former US Treasury Secretary and former Harvard President Lawrence Summers called the warnings “misguided” and Rajan himself a "luddite".[16] However, following the 2008 economic crisis, Rajan's views came to be seen as prescient; by January 2009, The Wall Street Journal proclaimed that now, "few are dismissing his ideas."[15] In fact, Rajan was extensively interviewed on the global crisis for the Academy Award winning documentary film Inside Job. Rajan wrote in May 2012 that the causes of the ongoing economic crisis in the US and Europe in the 2008–2012 period were substantially due to workforce competitiveness issues in the globalisation era, which politicians attempted to "paper-over" with easy credit. He proposed supply-side solutions of a long-term structural or national competitiveness nature: "The industrial countries should treat the crisis as a wake-up call and move to fix all that has been papered over in the last few decades... Rather than attempting to return to their artificially inflated GDP numbers from before the crisis, governments need to address the underlying flaws in their economies. In the United States, that means educating or retraining the workers who are falling behind, encouraging entrepreneurship and innovation, and harnessing the power of the financial sector to do good while preventing it from going off track. In southern Europe, by contrast, it means removing the regulations that protect firms and workers from competition and shrinking the government's presence in a number of areas, in the process eliminating unnecessary, unproductive jobs."[17]

During May 2012, Rajan and Paul Krugman expressed alternate views on how to reinvigorate the economies in the US and Europe, with Krugman mentioning Rajan by name in an opinion editorial. In an article in Foreign Affairs magazine, Rajan had advocated structural or supply-side reforms to improve competitiveness of the workforce to better adapt to globalisation, while also supporting fiscal austerity measures (E.g., raising taxes and cutting spending). Rajan conceded that austerity could slow economies in the short-run and cause significant "pain" for certain constituencies.[17][18] Krugman rejected this view, advocating instead traditional Keynesian fiscal stimulus (E.g., spending and investment) and monetary stimulus, arguing the primary factor slowing the developed economies was a general shortfall in demand across all sectors of the economy, not structural or supply-side factors that affected particular sectors.[19] This debate occurred against the backdrop of a significant "austerity vs stimulus" debate occurring at the time, with some economists arguing one side or the other or a combination of both strategies.[20][21][22]

In a 2014 interview, Rajan said his major targets as governor of the Reserve Bank of India were to lower inflation, increase savings and deepen financial markets, of which he believed reducing inflation was the most important. A panel he appointed proposed an inflation target for India of 6% for January 2016 and 4% (+-2%) thereafter.[12]


In 2003, he won the Fischer Black Prize awarded by the American Finance Association for contributions to the theory and practice of finance by an economist under age 40.[23] He was awarded the fifth Deutsche Bank Prize for Financial Economics 2013 on 26 September 2013 for his "ground-breaking research work which influenced financial and macro-economic policies around the world".[24] He was conferred the Best Central Bank Governor award for 2014 by Euromoney Magazine. He is conferred with the prestigious Governor of the Year Award - 2014 from London-based financial journal Central Banking.[25][26]

Achievements as the RBI governor[edit]

  • Rajan is known for his primary focus on curbing inflation. His biggest achievement is that he successfully brought down retail inflation to 3.78% in July 2015 from 9.8% in September 2013 – the lowest since the 1990s. Wholesale inflation was down to a historic low of -4.05% in July 2015 from 6.1% in September 2013.
  • In his first speech as RBI governor, Rajan promised banking reforms and eased curbs on foreign banking, following which Sensex rose by 333 points or 1.83%. After his first day at office, the rupee rose 2.1% against the dollar.
  • Under Rajan, the RBI adopted consumer price index (CPI) as the key indicator of inflation, which is the global norm, despite the government recommending otherwise.
  • India’s forex reserve is now stronger by about 30% than it was two years back. During the recent depreciation, Rajan said the central bank has forex reserves to the tune of $380 billion, which is a comfortable level, and would intervene if there was a need.
  • Under Rajan, two universal banks have been licensed and eleven payment banks have been given the nod. This is expected to extend banking services to the nearly two-thirds of the population who are still deprived of banking facilities.

Personal life[edit]

Raghuram Rajan is married to Radhika Puri, a classmate from IIM Ahmedabad, who is now a Lecturer in Law at University of Chicago Law School. They have a daughter and a son. His brother Mukund Rajan is the Brand Custodian and Chief Ethics Officer of Tata Sons[27][28][29] Rajan is a vegetarian and enjoys playing tennis and squash.[5][12] Rajan is an avid quizzer who appeared on national television with some of his friends in 1980s. He has also participated in various marathons, latest being the Standard Chartered Mumbai Marathon 2015.[30]



  1. ^ "I am an Indian citizen: Raghuram Rajan". October 30, 2013.  Quote: "I am an Indian citizen. I have always been an Indian citizen. I always held an Indian passport. I held an Indian diplomatic passport when my father was in the foreign service and when I travelled on behalf of the Ministry of Finance.I have never applied for the citizenship of another country. I have never been a citizen of another country and have never taken a pledge of allegiance to another country."
  2. ^ "Chicago Booth professor Raguhram Rajan is named Governor of Reserve Bank of India". 6 August 2013.  Quote: "Raghuram Rajan, a professor of finance at the University of Chicago Booth School of Business and the Indian government’s Chief Economic Adviser, has been named Governor of the Reserve Bank of India, the school announced today. While in this post, Rajan will be on leave from the university."
  3. ^ Singh, Mammohan (4 February 2014) 7 Interesting facts about 23rd RBI Governor Raghuram Rajan Daily Bhaskar, Retrieved 11 November 2014
  4. ^ Crabtree, James (30 August 2013) Raghuram Rajan, academic in a raging storm The Financial Times (requires a subscription), Retrieved 11 November 2014
  5. ^ a b Crabtree, James (15 August 2014) Lunch with the FT: Raghuram Rajan The Financial Times, Retrieved 11 November 2014
  6. ^ "The roots of Recession" Quote: "RAGHURAM RAJAN has always been a little precocious. Arguably the most famous alumnus of kolkata Public School, he was one of the youngest professors at Chicago's Booth School of Business, and, at 40, the youngest chief economist of the International Monetary Fund."[1]
  7. ^ "DSpace@MIT: Essays on banking
  8. ^ "Raghuram G. Rajan (Curriculum Vitae)" (PDF). Booth School of Business. Retrieved 13 August 2015. 
  9. ^ Sanjiv Shankaran et al. "Raghuram Rajan is adviser to PM". Mint. 4 November 2008. Retrieved on 18 August 2012.
  10. ^ "Raghuram Rajan appointed as new CEA. The Hindu. August 11, 2012. Retrieved on 18 August 2012.
  11. ^ Raghuram Rajan in RBI's new Guv list. The Indian Express. May 20, 2011
  12. ^ a b c Verma, Sid (October 2014) Rajan’s surgical strikes Euromoney, Retrieved 11 November 2014
  13. ^ Rajan, R. G., & Zingales, L. (2003). Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity. New York: Crown Business.
  14. ^ Raghuram Rajan. "Has Financial Development Made the World Riskier?". National Bureau of Economic Research. November 2005. Retrieved on 18 August 2012.
  15. ^ a b Justin Lahart. "Mr Rajan Was Unpopular (But Prescient) at Greenspan Party". Wall Street Journal. 2 January 2009. Retrieved on 18 August 2012.
  16. ^ Paul Krugman. "How Did Economists Get It So Wrong?". The New York Times. 2 September 2009. Retrieved on 18 August 2012.
  17. ^ a b Rajan, Raghuram G. (2012-05-01) Foreign Affairs-Rhaguram Rajan-The True Lessons of the Financial Crisis-May/June 2012. Foreignaffairs.com. Retrieved on 2012-05-16.
  18. ^ Project Syndicate-Raghuram Rajan-Central Bankers Under Siege-May 2012. Project-syndicate.org (2012-05-08). Retrieved on 2012-05-16.
  19. ^ Paul Krugman Easy Useless Economics. NY Times. May 2012
  20. ^ Ummelas, Ott. (2012-05-12) Bloomberg-Rehn Rejects ‘False’ Choice Between Austerity, Stimulus-May 2012. Bloomberg.com. Retrieved on 2012-05-16.
  21. ^ Christine Romer-Hey Not So Fast on European Austerity. NY Times. April 28, 2012
  22. ^ Project Syndicate-Michael Spence-The Global Jobs Challenge-October 2011. Project-syndicate.org (2011-10-17). Retrieved on 2012-05-16.
  23. ^ "Raghuram G. Rajan: Biographical Information". International Monetary Fund. Retrieved on 18 August 2012.
  24. ^ "RBI governor Raghuram Rajan receives Deutsche Bank Prize, 2013". Business Standard. 27 September 2013. Retrieved 27 September 2013. 
  25. ^ (15 October 2014) Raghuram Rajan gets Euromoney's best central bank governor award The Hindu Business Line, Retrieved 11 November 2014
  26. ^ http://www.centralbanking.com/central-banking/news/2389654/the-winners-of-the-central-banking-awards-2015
  27. ^ (4 September 2014) Raghuram Rajan: 10 things to know about the new RBI governor NDTV, Retrieved 11 November 2014
  28. ^ Raman, Kripa (2 September 2013) The new Rajan Mumbai Mirror, Retrieved 11 November 2014
  29. ^ http://www.law.uchicago.edu/faculty/puri
  30. ^ "Mumbai marathon: Running for glory". http://indiatoday.intoday.in. Living Media India Limited. Retrieved 2 October 2015. 
  31. ^ a b Rajan, R.G.: Fault Lines: How Hidden Fractures Still Threaten the World Economy. Press.princeton.edu (2012-04-17). Retrieved on 2012-05-16.
  32. ^ Ovide, Shira (28 October 2010). "The Best Business Book of 2010: ‘Fault Lines'". The Wall Street Journal. 
  33. ^ Our Thinking. Goldman Sachs. Retrieved on 2012-05-16.
  34. ^ Business Book Of The Year Award 2010: Longlist announced for the Financial Times and Goldman Sachs | About us | FT.com. Aboutus.ft.com (2010-08-09). Retrieved on 2012-05-16.

External links[edit]

Business positions
Preceded by
Kenneth Rogoff
IMF Chief Economist
Succeeded by
Simon Johnson
Preceded by
Kaushik Basu
Chief Economic Adviser
Succeeded by
Arvind Subramanian
Preceded by
Dr. D Subbarao
Governor of Reserve Bank of India