Faced with declining value of the rupee and widening current account deficit (CAD), Reserve Bank of India Governor-designate Raghuram Rajan, on Monday, said there was no magic wand to solve the challenges before the country overnight, and he would endeavour to deal with them one at a time.
Dr. Rajan, 50, who has been in the Finance Ministry as the Chief Economic Advisor for barely a year, will replace D. Subbarao, who demits office on September 4, as the RBI Governor.
“We have enough ideas. It is not just the currency, it is financial inclusion, it is growth. I think there is a lot to do. There are challenges in the economy... These things are not going to be overcome overnight. There is no magic wand.
“But there are undoubtedly solutions to many of the problems that the RBI can tackle and the job is to go ahead and do it.
“We will do it one step at a time. Make sure that it progresses everyday,” he told reporters on his last day of office at the Finance Ministry.
Dr. Rajan, a former IMF chief economist, was appointed as the Chief Economic Advisor in the Finance Ministry in August last year. His appointment as the 23rd central bank chief comes at a time when the economy is battling industrial slowdown, declining rupee, rising prices and all-time high CAD.
“Expectations are challenging. I think the job is a complex one. There are many issues including managing institution itself...
“I think in some ways there are commonalties among bureaucracies but each organisation has its own culture, has its own tempo... I am looking forward,” he said.
Besides combating key issues such as volatile rupee and CAD, Dr. Rajan will have to take a call on continuing with the RBI’s practice of mid-quarter policy review every 45 days, which was initiated by Dr. Subbarao.
There has been a speculation that Dr. Rajan is not in favour of mid-quarter reviews and could dispense with the practice, although the scheduled mid-quarter review due later in the month would be brought out.
