If you have been keeping up with the latest news developments, you would know about Mr. Raghuram Rajan's appointment as the 23rd governor of the RBI this week.
You might also know about his impressive background. Being the former chief economist of the IMF (International Monetary Fund), he has certainly though non- intentionally, created a celebrity like image.
The University of Chicago economist famously predicted in his 2005 book "Fault lines: How hidden fractures still threaten the world economy" that, due to the financial developments happening at the time, a worldwide financial crisis could emerge in a few years. At that time, his views were held in a mostly negative light in the USA.
After all, the pastures were green, the US economy was booming and the last thing anybody wanted to hear was an economist predicting a financial meltdown.
Alas, after the 2008 economic crisis took the world by storm, Mr. Rajan was heralded as a brilliant economist, and rightly so. But it is one thing to predict a crisis, and whole other issue to remedy a broken economy.
Mr. Rajan deserves full credit for his work and analysis in forecasting the impending 2008 financial crisis.
However, it puzzles the mind to see that Prime Minister Manmohan Singh promoted Mr. Rajan as an honorary economic adviser in late 2008 after the US economic community recognized Mr. Rajan for his works book published three years in the past. If Mr. Rajan was to be promoted, why not in 2005 when his book was published? Why did it require a global "approval" of economists and politicians of Mr. Rajan for him to become an economic adviser?
If India truly believed in Mr. Rajan's economic policies, they should have promoted him based on his work, not on his approval by the global economic community.
But as they say, let bygones be bygones. Post 2008 is where Mr. Rajan's work gets interesting. The Prime Minister had tasked Mr. Rajan to head the 2008 Planning Commission. The final report, titled "100 Small Steps", comprehensively laid out a strategic roadmap to modernize the failing financial and ecosystem of India.
It appeared comprehensive, no doubt: 207 pages in length, it was a top down report broken down into 100 "convenient steps" to tackle everything from macroeconomic problems plaguing the government to street level remedies to create a "leveling playing field".
Mr. Rajan was lauded for the paper, critics maintaining that this is what India needed: a reformer unafraid to put forth bold ideas. Alas, 5 years later, almost all of Mr. Rajan's ideas have not been touched upon, much less implemented. It is unfortunate that Mr. Rajan commented that "100 steps can take us far".
India's economic situation is in shambles right now. My previous column highlighted this in detail. High inflation, a crumbling Rupee, low GDP forecasts, and a nightmarish rising current account deficit are just some reasons for the country to brace for the worst in the coming months.
How does Mr. Rajan plan to deal with these issues? The worrying aspect is that, despite all the hype behind his nomination, very little is known about how he plans to tackle these issues. All we have to lean on is his work with the IMF and his various papers that he has published over the years, mostly in the USA.
Despite credentials that look enviable on paper, Mr. Rajan has unfortunately not implemented any major groundbreaking reforms in India as of yet, and has remained shockingly mum on what his immediate plans are once he gains nominations.
There is a common saying that there is a big difference between having "book smarts versus street smarts".
Let's hope that in Mr. Rajan's case, he turns out to be the rare breed that encompasses both.
Raghu Kumar is the co-founder of RKSV, a broking company. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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