Mr. Rajan will replace D. Subbarao, who completes his five-year term on September 4, 2013 and will be the 23rd Governor of the central bank.
“Prime Minister Manmohan Singh has approved appointment of Raghuram Rajan as Governor of RBI for a term of three years,” an official statement said.
After the announcement of his appointment as the new RBI governor, Rajan made a brief statement to reporters without taking any questions.
“These are challenging times for the Indian economy… The government and the RBI are working together to address these challenges. We don’t have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt, we will deal with them,” he said.
Mr. Rajan said “I look forward to working with many dedicated employees of the RBI to continue these traditions even though I will miss my colleagues in the Finance Ministry“.
The RBI, he added, is a great institution with a tradition of great integrity, independence and professionalism.
Mr. Rajan, a former IMF chief economist, was appointed as the Chief Economic Advisor in the Finance Ministry in August last year.
As the new RBI chief, Mr. Rajan will have a challenging time as he will have to battle the declining rupee, sliding growth and rising retail inflation, amid global economic uncertainty.
Known for his frank views, Mr. Rajan was also honorary economic advisor to the Prime Minister. He was acclaimed for predicting the 2008 global financial crisis.
An alumni of IIM-Ahmedabad and IIT-Delhi, Mr. Rajan did his doctorate from the Massachusetts Institute of Technology. He was professor at the University of Chicago’s Booth School of Business before taking over as CEA.
Mr. Rajan was also involved with the report on Financial Sector Reforms, which was authorised by the Planning Commission.