Troubled India gets new central bank chief
Raghuram Rajan takes over as head of Reserve Bank of India amid declining rupee and economic slowdown.
Raghuram Rajan, a former IMF chief economist, has taken over as India’s central bank chief amid growing worries over the country’s faltering economy.
Rajan replaced Duvvuri Subbarao as governor of the Reserve Bank of India (RBI), which has been battling to prop up the plummeting rupee and reverse a sharp economic slowdown.
Investors will be looking to Rajan, one of the few economists who said that sub-prime lending could lead to calamity before of the 2008 crisis, to introduce policies to calm jittery markets and stabilise the rupee.
Abheek Barua, chief economist with HDFC Bank, called Rajan “more innovative” than Subbarao, who spent five years at the helm of the RBI.
The 50-year-old inherits an economy struggling with a record current account deficit, a currency which has lost up to a quarter of its value against the dollar this year and annual growth at its weakest in a decade.
Slowest growth
India’s economy grew by 4.4 percent in the first three months of the fiscal year, the slowest quarterly expansion since 2009.
|
|
| Business editor discuss Indian economy slowdown |
The five percent growth rate last year was the lowest in a decade.
Adding to the gloom, a report from the World Economic Forum on Wednesday said India had slipped to 60th position out of 148 nations in terms of its global competitiveness, its lowest ever rank.
The government is desperate to stimulate growth before general elections due next year. The RBI has come under growing pressure to cut interest rates but it also needs to counter high inflation.