Raghuram Rajan facts for kids
Quick facts for kids
Raghuram Rajan
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Rajan in 2004
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| 23rd Governor of the Reserve Bank of India | |
| In office 4 September 2013 – 4 September 2016 |
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| Prime Minister | Manmohan Singh Narendra Modi |
| Preceded by | Duvvuri Subbarao |
| Succeeded by | Urjit Patel |
| 15th Chief Economic Adviser to the Government of India | |
| In office 10 August 2012 – 4 September 2013 |
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| Prime Minister | Manmohan Singh |
| Preceded by | Kaushik Basu |
| Succeeded by | Arvind Subramanian |
| 7th Chief Economist of the International Monetary Fund | |
| In office 1 September 2003 – 1 January 2007 |
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| Preceded by | Kenneth Rogoff |
| Succeeded by | Simon Johnson |
| Personal details | |
| Born | 3 February 1963 Bhopal, Madhya Pradesh, India |
| Spouse | Radhika Puri |
| Education | Campion School Bhopal Indian Institute of Technology, Delhi (BTech) Indian Institute of Management, Ahmedabad (PGDM) Massachusetts Institute of Technology (PhD) |
| Signature |  |
Raghuram Govind Rajan (born 3 February 1963) is a famous Indian economist. He is currently a professor at the University of Chicago's Booth School of Business. From 2003 to 2006, he was the Chief Economist at the International Monetary Fund (IMF). Later, from September 2013 to September 2016, he served as the 23rd Governor of the Reserve Bank of India (RBI). In 2015, he also became the Vice-Chairman of the Bank for International Settlements.
Before the 2008 financial crisis, Rajan warned about big risks in the financial system. He suggested ways to make the system safer. At first, some people, like former U.S. Treasury Secretary Lawrence Summers, didn't agree with him. But after the crisis happened, many realized his warnings were very accurate. He was even interviewed for the movie Inside Job (2010).
In 2003, Rajan received the first Fischer Black Prize. This award is given to financial economists under 40 who have made important contributions. His book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, won a major business book award in 2010. In 2016, Time magazine named him one of the '100 Most Influential People in the World'.
Contents
Early Life and Learning Journey
Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh, India. His father, R. Govindarajan, worked for the Intelligence Bureau. His family moved a lot because of his father's work. They lived in Indonesia, Sri Lanka, and Belgium. Rajan sometimes missed school due to political issues in these countries.
The family returned to India in 1974. Rajan attended Campion School, Bhopal for a short time. From 1974 to 1981, he went to Delhi Public School, R. K. Puram.
Higher Education and Achievements
In 1981, Rajan started studying electrical engineering at Indian Institute of Technology Delhi. He was a top student and received the Director's Gold Medal in 1985. This award is for the best all-round student.
In 1987, he earned a Post Graduate Diploma in Management (like an MBA) from the Indian Institute of Management Ahmedabad. He also won a gold medal for his excellent academic performance there. He briefly worked for Tata Administrative Services. However, he soon left to pursue a PhD at the Sloan School of Management at Massachusetts Institute of Technology.
In 1991, he earned his PhD for his work on banking. His research looked at how financial systems were changing in the 1980s. He explored how firms choose between different types of loans. He also studied conflicts of interest when banks offer many services. Rajan's work showed that deregulation might not always lead to better efficiency.
He has also received honorary doctorate degrees from several universities. These include the London Business School (2012) and the Hong Kong University of Science and Technology (2015).
Career Highlights
Academic Contributions
In 1991, Rajan became an assistant professor of finance at the Booth School of Business. He became a full professor in 1995. He has also been a visiting professor at other well-known schools.
Rajan has written many articles and books about banking and finance. He often writes for Project Syndicate. He has worked with Douglas Diamond on important research about banks. He also collaborated with Luigi Zingales on how financial markets affect economic growth. Their book, Saving Capitalism from the Capitalists (2003), argued that open financial markets help economies grow.
His 2010 book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, looked at why the 2007–2008 financial crisis happened. He suggested that growing income inequality in the US and global trade imbalances played a role. This book won the Financial Times and McKinsey Business Book of the Year Award.
Rajan is considered one of the world's most influential economists. He is ranked among the top 5% of authors by the Research Papers in Economics project. He received the first Fischer Black Prize in 2003 for his important work in finance.
He became a member of the American Academy of Arts and Sciences in 2009. He also served as the president of the American Finance Association in 2011. He is part of the Group of Thirty, an international economic group.
Shaping Economic Policy
Work at the IMF
After the 1997 Asian financial crisis, the International Monetary Fund (IMF) faced criticism. They were criticized for asking developing nations to cut spending. The IMF wanted to improve its financial expertise. Anne Osborn Krueger, a top IMF official, read Rajan's book. She then asked him if he would be interested in joining the IMF.
Rajan was appointed Chief Economist at the IMF in October 2003. He was the youngest person and the first from an emerging market country to hold this position. He served until December 2006. At the IMF, Rajan helped include financial analysis in their economic models. He also worked on ways to help major economies reduce trade imbalances.
He published research that sometimes went against common IMF ideas. For example, a 2005 paper questioned if foreign aid always helps growth. Another paper in 2006 suggested that foreign financing might slow growth in some non-industrial countries.
Advisor to India's Government
In 2007, Rajan was asked to write a report on financial sector reforms in India. He led a committee that suggested many small steps for reforms. These steps aimed to improve the financial sector across the country.
In November 2008, Indian Prime Minister Dr Manmohan Singh appointed Rajan as an honorary economic adviser. On 10 August 2012, Rajan became the Chief Economic Adviser to the Government of India. He prepared the Economic Survey of India for 2012–13. In this survey, he advised the government to reduce spending. He also suggested moving people from agriculture to skilled manufacturing and services.
Leading the Reserve Bank of India
On 6 August 2013, it was announced that Rajan would become the Governor of the Reserve Bank of India (RBI). He took charge on 5 September 2013, for a three-year term. He took a break from his teaching job at the University of Chicago Booth School of Business.
In his first speech as RBI governor, Rajan promised banking reforms. He also made it easier for foreign banks to operate. This led to a rise in the Indian stock market. His main goal as RBI governor was to control inflation (rising prices). He successfully brought down retail inflation from 9.8% in 2013 to 3.78% in 2015. This was the lowest since the 1990s.
Under Rajan, the RBI started using the consumer price index (CPI) to measure inflation. This is a common practice worldwide. India's Foreign exchange reserves of India also grew significantly. The RBI also allowed new types of banks to open. This helped bring banking services to more people.
During his time, he made credit card transactions safer. He required two-factor authentication for domestic cards. However, he also allowed banks to charge for ATM transactions beyond a certain limit.
In 2015, Rajan was appointed Vice-Chairman of the Bank for International Settlements (BIS). In May 2016, a politician named Subramanian Swamy made some accusations against Rajan. Rajan stated that these claims were false and baseless.
On 18 June 2016, Rajan announced he would not serve a second term as RBI Governor. He planned to return to teaching. In 2017, Rajan said he was willing to stay. However, the government did not offer him an extension.
Economic Ideas and Views
Rajan's economic views were shaped by his experiences in India. He believes in capitalism but is careful about too much government control. He also worries about unregulated financial markets. He supports democracy working alongside capitalism. In 2023, he said that India's democracy helps its economic growth.
Financial Markets and Risks
Rajan believes financial markets should play a bigger role in the economy. In his book Saving Capitalism from the Capitalists, he argues for open financial markets. He says they help spread opportunities and fight poverty. He believes strong financial markets are key to economic growth.
In 2005, Rajan gave a speech about the financial sector. He warned that financial managers might take big risks. These risks could lead to severe problems, even if they seem unlikely. He questioned if banks could handle a major crisis.
At the time, his warnings were not well-received. But after the 2007–2008 financial crisis, his ideas were seen as very insightful. He was interviewed for the documentary Inside Job. Rajan wrote in 2012 that easy credit had hidden problems in the US and European economies. He suggested long-term solutions, like better education for workers. He also advised encouraging new businesses and managing the financial sector carefully.
Austerity Versus Stimulus
In 2012, Rajan and economist Paul Krugman had different ideas on how to fix economies. Rajan supported structural reforms and fiscal austerity (cutting government spending). He believed this would make the workforce more competitive. He admitted that austerity could slow economies in the short term.
Krugman, however, favored traditional government spending and investment. He argued that the main problem was a lack of demand. Rajan's views on India balance growth and welfare. He sees growth as key to development. However, he also supports government involvement in health and education.
In 2019, Rajan said that modern capitalism is "under serious threat." He believes it has stopped providing opportunities for many people. He warned that this could lead to a revolt from the public.
Demonetization in India
In 2017, Rajan stated that the Indian government had discussed demonetization with the RBI. However, he said the RBI was against the idea. They warned the government about the possible negative effects. Rajan called the currency ban "not an economic success."
Awards and Recognition
- In 2003, he won the first Fischer Black Prize.
- In 2010, NASSCOM named him Global Indian.
- In 2010, his book Fault Lines: How Hidden Fractures Still Threaten the World Economy won a major business book award.
- In 2011, he received the Infosys Prize for Social Sciences – Economics. This was for his work on financial development and risk-taking.
- In 2013, he was awarded the fifth Deutsche Bank Prize in Financial Economics.
- In 2014, he received the "Governor of the Year Award 2014" from Central Banking journal.
- In 2019, he was given the "Yashwantrao Chavan National Award 2018."
- In 2023, he received an honorary doctorate from the London School of Economics.
Personal Life
Raghuram Rajan is an Indian citizen and also holds a USA Green Card. He is married to Radhika Puri Rajan. They met when they were students at IIM Ahmedabad. Radhika teaches at the University of Chicago Law School. They have a daughter and a son.
Rajan is a vegetarian. He enjoys being outdoors and plays tennis and squash. He likes reading books by authors like Tolstoy and J. R. R. Tolkien. In 1985, he appeared on a TV quiz show called Quiz Time. He also participates in marathons, like the Standard Chartered Mumbai Marathon in 2015.
Images for kids
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Rajan in 2004
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Raghuram Rajan's signature
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Rajan with Lionel Barber and Lloyd Blankfein in 2010.
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Chief Economic Advisor Raghuram Rajan in New Delhi in 2013.
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Raghuram Rajan meeting Prime Minister Narendra Modi in 2014.
