The sudden decision to step down by the man deemed by many to be the world’s best central banker has raised doubts over the Indian government’s commitment to structural reforms, as well as India’s position as a harbor of safety amid troubles in other emerging markets.
Reserve Bank of India (RBI) chief Raghuram Rajan announced at the weekend that he would not seek a second term when his three-year reign ended in September, and would return to academia instead.
Rajan, a former chief economist at the International Monetary Fund, has earned rockstar status in the financial industry for his achievements, which include lowering runaway consumer prices and stabilizing the exchange rate.
“When Rajan took the helm in September 2013, the economy was declining at an annualized rate of 2 percent on quarter, consumer prices were soaring 9.8 percent, the rupee was down 16.6 percent from the year earlier, and the current account deficit was estimated at 4 percent of GDP,” independent analyst and CNBC columnist Michael Ivanovitch said. “He is now leaving an economy growing at a rate of 9.6 percent, inflation is down to 5.8 percent, the rupee lost only 4.7 percent from its year-earlier level, and the estimated current account deficit is about 1 percent of GDP.”
Famously gloomy investor Marc Faber has reportedly called Rajan “the only central banker I trust,” while another high-profile investor, Jim Rogers, has described him as “probably the best central banker in the world.”