rexit ( raghuram rajan's exit)

Raghuram rajan and India

By – Pranav Gothoskar

Who is Raghuram Rajan?

23rd governor of Reserve Bank of India.Chief economic adviser to India’s Ministry of Finance.

Chief economist at International Monetary Fund.He was a gold medalist at both IIT and IIM.He won the Fisher Black Prize awarded by the American Finance Association.

Raghuram Govinda Rajan is one of the Top 10 Economists of the world In 2003.

l What Raghuram Rajan Did as a Governor

l (source- Kotak securities & Indianexpress)

Rajan’s most visible achievement during his term as the RBI governor is reigning in inflation.

#1

His term saw two repo rate increases which totaled to 50 basis points. This helped inflation to drop from 11.5% at its peak to 3.3% in November 2014.

#2

Then came by, five repo rate cuts aggregating to 150 basis points. He left rates unchanged at 6.5% at Tuesday’s meeting.

#3

Rajan initiated Swachh bank exercise – clean-up of the bad loans in the banking sector, particularly public sector banks.

#4

He made way for the banking structure reforms by allowing entry of small finance banks & payments banks.

#5

As he leaves, he could be the last RBI governor to have decided on monetary policy. Henceforth, policy decisions will be vote-driven rather than being directed only by the governor.

#6

RBI will set a formal inflation target with a casting vote for the governor in the forthcoming policy reviews.

#7

Why Raghuram Rajan is Stepping Down?

> Governor Rajan’s monetary policy view

> Conflict with fiscal authorities

> Erosion to RBI’s policy independence

> Central bank policy independence

Impact of Raghuram Rajan's Exit

Currency Outflow

Change in Inflation

Change In RBI's Policies

Change in Interest Rates