As it said “With great powers comes great responsibilities “and to manage and monitor the duties, roles, responsibilities such as controlling monetary , currency , credit systems etc. of the Reserve Bank of India is the crucial and most important objective of the governor. With the double pace and momentum of framing the policies, maintaining the foreign exchange market, controlling inflation and interest rates, regulating the commercial banks and all the activities which proves advantageous for our country is carried forward by 23rd Governor of Central Bank of India who has been previously occupied the position of the youngest chief economist at International Monetary Fund and renowned eminent of our country Dr. Raghuram Rajan.
Raghuram Rajan was born in a Tamilian family in Bhopal, Madhya Pradesh on 3rd February 1963. He completed his education with remarkable excellence even after missing his one year of school due to his father’s posting. He did his schooling from Delhi Public School RK Puran. He graduated with the Bachelors Degree in Electrical Engineering from the Indian Institute of Technology (IIT) in the year 1985. In 1987 he completed his Post Graduation Diploma in Business Administration from Indian Institute of Management (IIM) Ahmedabad. He received his Ph.D. Degree in Finance from MIT Sloan School of Management for a thesis paper named ‘Essay on Banking’ in 1991. In the same year he joined the Booth School of Business at University of Chicago as a Finance Professor. His keen interest lies in playing Badminton and Squash.
Raghuram Rajan was felicitated by Fischer Black Priza given by American Finance Association to Economist at the age below 40 for contributing to the theory and practice of finance. The book written by him named Faults Lines: How Hidden Fractures Still Threaten the World Economy won the Financial Times- Goldman Sachs Business Book of the year in 2010. He was presented with the fifth Deutsche Bank Prize in Financial Economics for magnificent research work in financial and microeconomic policies around the world. His name is also included in the list of the ‘100 Most Influential People in the World’ by Time Magazine. He has also been recognized as one of the best central bank governor worldwide.
Performance during his tenure
The country could not have asked more efficient and capable person i.e Dr Rajan to lead RBI where monetary framework formed by the predecessor governor lacked to bring stability in the economy and failed to fulfill or tackle the problems effectively. The first day of office made him confident to bridge the gap and shape successful policies to overcome factors which impacted negatively.
- Rajans major focus was to restrain inflation from increasing at higher rate and his struggle was successful when the inflation rate dropped down to 3.69% in 2015. He followed Consumer Price Index as a key indicator of inflation as it reflects better demand side pressure than Wholesale Price Index. CPI showed drastic change at 5.24% in April 2016 which was hiked at 9.52% in August 2013 before his joining as a Governor.
- Rajan assured the markets that RBI has sufficient tools to handle the currency when previous governor said in the interview of having limited tools to protect the currency. There was remarkable comeback of slipping currency from Rs 69.22 per dollar to 65.54 on 5 September restoring the faith of foreign investors and increasing the growth plus lowering the fiscal deficit. Since his day of appointment Rajan is passionately working towards the volatility of rupee against dollar moving back and forth rapidly between Rs 58.27 in 2014 to Rs 67.29 as of last week.
- Indian Forex Reserve have shown tremendous increase and have become stronger after Rajan being appointed as the governor recording high of $359.76 billion as on 1 April 2016 to $249 billion in September 2013. Improving macro-economic situation of the country FIIs have become net buyers having invested RS 15,665 crore in Indians Equities and Rs 816 crore in Indian debt market. High forex reserves helps to maintain liquidity if any crisis occurs and further improvement of stock market has increase the number of investors in Indian Markets.
- Carrying Non Performing Assets on the balance sheet reduces the cash flow of the lenders which can create problem in the budget and decrease in earning. Indians banks are facing challenge to overcome with more than 110 millions corporate debts holding distribution of fresh loans and setting a drawback for economy. Rajan has given banks power and flexibility to deal with the bad loan cleaning and making it more transparent by March 2017 and be in a position to grow and lend. Banks require deep surgery to put their stressed project back on track said by the governor.
- The Indian banks are functioning the hands of public which used to finance Crony Capitalism. It is basically a term relates the close relationship between the business people and government officials exhibited by favoritism in the distribution legal permits, grants, and special tax breaks etc. which has held the country back for years. Rajan has rightly decided to force the banks to cut down exposure to their dubious borrowers which are considered best from the economic point of view. This will reduce number of debtors in the country enabling rise in the economy.
- Rajan came up with a new mobile application called Unified Payment Interface turning the Smartphone into a bank where payments are instantly made without wasting any time and also reduces the cost after downloading it. This app is used to pay any transaction below 1 lakh.
- Small Finance and Payment Banks have been set up in Rajan’s tenure to regulate the objective of serving the needs of small borrowers particularly for small businesses increasing the penetration of financial services. RBI granted ‘in principle’ approval to 11 entities, 2 universal banks and ten small finance banks were also given in-principle approval for creating a base for small industries.
“Don’t fix it if it ain’t broke.” Mr. Rajan is a man who excellently predicted the 2008 global economic crisis proves to be an asset to the nation and well deserved to be elected as the governor who made the entry at the right time when Indian Economy was in poor conditions. He tops the Indian Central Bank because of the extraordinary knowledge and skills he possesses. His agenda prepared against the inflation rate, currency depreciation, market developments etc witnessed success and the foreign community again accustomed to his quick and decisive style of tacking issues.
We hope the government takes proper steps and chooses the next governor who could be at par to replace the Rajan.