Born on the 3rd of February,1963,Raghuram Rajan was the third son of an IPS officer.The academic institutions where he trained his intellectual prowess were Delhi Public School,Indian Institute of Technology,(Delhi).Just like every other Indian kid,he was probably told “First become an engineer,then you can do whatever you want.”.After becoming an electrical engineer he decided to take the next step which most of the successful IITian’s take ,getting a degree from the Indian Institute of Management(Ahmadabad).One might expect such a student to work for a major corporate firm earning a six figure salary abroad and sending home the extra dollars.Instead he went ahead and got his PhD from MIT Sloan School of Management.
We could discuss all his academic achievements but that would be lengthy and boring to most of us who are still trying to figure out what to do with our college degrees.So let me directly jump to the topic which matters the most.
Why is he so important to roughly 17 % of the world population?
1.Brutally honest- “Indian economy is like the one eyed king in the land of the blind”.He didn’t sell dreams but catered reality,when it came to India’s position in the global economy.
2.Not a blind critic-The same man even continued saying “a bunch of good things have happened” in India, but there were “still some things to do”.
3.How can I send money to my uncle’s daughter’s bestfriend’s dad’s brother’s sister in law?-Recalling a new payment platform allowing mobile to mobile transfer between any two bank accounts he said, “It is a public platform, so anybody can participate. It is not owned by any one company unlike Apple Pay or Android Pay or whatever. I think it is the first of its kind.
“So, technological developments are happening and making for a more, hopefully, reasonable life for a lot of people. Let’s see how it goes,” ..
4.But look at China!- Yes,our closed neighbour has always been a source of inspiration and envy. Rajan says “We are about a quarter to a fifth their size(ouch!). I think that we could catch up if we do the right things over a period of time.
“It is extraordinary what good policies they followed to get where they are, so we have to be very good at our policy-making as well as our implementation. I think what people admire China for is how they have managed to get things done.”.
5. Should I carry my umbrella today? -Yes, monsoon is what drives our agriculture, even with modern farming techniques most of our farmers depend on it and has a major say in our country’s economy.Rajan says”It does significantly influence sentiment in rural areas, rural demand. It certainly affects about 50 per cent of our population which is tied in some way to agriculture. Only 15 per cent of value-added is agriculture and that is still falling, but many people have rural links. So, the monsoon does impact all that.
“It has a moderate impact on food prices because good food management can alleviate the effect of the monsoon. But if we have a bountiful monsoon, then we don’t need effective food management to get lower food prices. We are all keeping our fingers crossed. The good news seems to be that the meteorological department is saying it is probably going to be a good monsoon.”
6.Are you really interested about Interests? – Yes,We need to know how much will a bank give me for my deposit and how much will they snatch from us for our loans.
Raghuram Rajan says”We have also been able to cut interest rates by 150 basis points after raising them initially. This has reduced the nominal interest rate the government has to pay even while lengthening maturities it can issue – the government has been able to issue a 40-year bond for the first time,”.
7. Can I really afford it?- Inflation,the thing in our newspapers and economic textbooks that swallows countries as a whole. It has recently had some Greek food for lunch (pun intended) and there was a time when it was developing a liking for Indian curries. According to NDTV “Dr Rajan took over as RBI chief in 2013, India was reeling under high fiscal and current account deficits in a slowing economy. India was then clubbed with “Fragile Five” countries, a term used for countries with high inflation, currency volatility and weak growth. When he is leaving, India is the fastest-growing big economy in the world.”
And what Rajan said ,”Today, we are the fastest growing large economy in the world, having long exited the ranks of the Fragile Five,”.
8. But what about Vijay Mallaya? Will there be another King of Fraud Times?- Yes,bad loans are the friends who take money to pay their attendance fines in college and spend it on drinking and then again losing more attendance. To that Rajan said,”We have done far more than was laid out in that initial statement, including helping the government reform the process of appointing Public Sector Bank management through the creation of the Bank Board Bureau, creating a whole set of new structures to allow banks to recover payments from failing projects, and forcing timely bank recognition of their unacknowledged bad debts and provisioning under the Asset Quality Review (AQR),”
The list is endless,but his greatest contribution would be to encourage young guns like us to look into our countries economics and understand what is happening.I don’t know if it is the work of the government or his own decision to step down but he is going to be like the ex-girlfriend who will always be our Facebook password.