MUMBAI, India — Indian newspapers have been gushing about the incoming governor of the central bank, Raghuram Rajan, in terms usually reserved for Bollywood film stars: his trim physique, his long-distance running, even his “rather photogenic appeal,” as The Mumbai Mirror tabloid wrote this week.
This may not last long.
Rajan, 50, took charge Wednesday of the Reserve Bank of India, which has tried and failed to stop the steep decline of the rupee against the dollar. India’s chronic inflation is almost certain to move higher in the coming months, given the country’s heavy dependence on imported oil priced in dollars. The stock market is plunging as economic activity slows by the day.
Yet all of his policy options carry big risks that could antagonize large sectors of the public.
“Any entrant to the central bank governorship probably starts at the height of their popularity,” Rajan said at a news conference early Wednesday evening. “Some of the actions I take will not be popular. The governorship of the central bank is not meant to win one votes or Facebook ‘likes.’”
Rajan, a University of Chicago finance professor, used his initial news conference to announce a long list of financial deregulatory measures that he plans in the coming weeks and months. These included steps aimed at increasing competition in India’s banking sector.