Raghuram Rajan will have a difficult task on his hands when he takes up the role of governor of the Reserve Bank of India next month.
Monetary policy has come into sharp focus in India as the country's central bank tries to carefully balance the contrary forces of slowing growth with high inflation and a fragile rupee.
The current RBI governor, D Subbarao, finishes his five-year tenure on September 4. Before the announcement that Mr Rajan, a former IMF chief economist, would step into his shoes, there was no clear favourite for the position. On the day Mr Rajan's appointment was announced, India's stocks plunged and the rupee tumbled to yet another record low, a stark warning of the magnitude of the challenges the new central bank chief will have to grapple with.
Still, the consensus among industry leaders and analysts alike is that Mr Rajan is the right man for the job. Currently in the role of chief economic adviser to the finance ministry and having predicted the global financial crisis in 2005, three years before it occurred, his credentials are strong. At the age of 50, he is relatively young for an RBI governor.
"The new governor has his work cut out," says Sonam Udasi, the senior vice president and head of research at IDBI Capital Markets. "Because he has had such a great experience in predicting the crisis and being at the IMF, he brings a certain global perspective as well, and he has been chief economic adviser for the past one year, so he is well aware of the problems that are faced in the country today. From that angle, I think from day one he will begin to put his stamp of authority and be thinking about how he needs to tackle this."
The RBI is caught between a rock and a hard place, Mr Udasi says. Lowering interest rate cuts would make borrowing cheaper and help to stimulate the economy after growth hit a decade low of 5 per cent in the last financial year. But lower rates would be detrimental for the weak rupee and would exacerbate inflation levels.
"It's a very hard balance," he says.
Mr Rajan is well aware of that there is no easy solution to the challenges he will be managing during his three-year tenure.
"These are challenging times for the Indian economy, and the RBI and the government will work together," he said. "We don't have a magic wand to make the problems disappear. But absolutely we will deal with them."
Mr Rajan was born in Bhopal, studied at Indian Institute of Technology Delhi and Indian Institute of Management Ahmedabad and completed a doctorate at Massachusetts Institute of Technology. He has authored acclaimed books, including one titled Saving Capitalism from the Capitalists.
Sujan Hajra, who is now the chief economist at Anand Rathi and spent more than a decade at the RBI, says he thinks Mr Rajan is well qualified for the job through his academic credentials and experience.
"Given his views on how to run a capitalistic economy and he's a pro-market kind of a person, so all those things should actually give some confidence to investors, both Indian as well as global," Mr Hajra says. "I think his recent stint at the ministry of finance is also likely to make him slightly more growth oriented, so to that extent the monetary policy that he rolls going forward is likely to be reasonably accommodative.
"But having said that, I personally feel that it's not the governor's personality which impacts the monetary policy very much. It's more of a system-driven thing in the RBI. Where the governor's role becomes much bigger is on structural reforms. Say for example, new bank licences or any kind of financial sector reforms, there the personality of the governor matters far more than the day-to-day monetary policy making."
Mr Subbarao, the current governor, had set high standards for the position and his work was "exemplary" as he steered monetary policy through some of the most difficult economic circumstances, according to Mr Hajra.
Industry in India heaped praise on Mr Rajan. "He has impeccable academic credentials and global experience which are well suited to his role as RBI Governor in a world of increasingly interconnected economies," says AM Naik, the group executive chairman of Larsen & Toubro, an Indian multinational conglomerate, which spans several sectors such as information technology and construction. "His young age will give him the required energy and dynamism to deal with the rapidly changing environment. He is the most appropriate person to guide India's monetary policy through the turbulent times that the global economy is facing."
Analysts point out that the RBI is governed by a board of directors, which can limit the governor's decision-making powers.
"When people are not part of RBI they talk [with] a certain tone," says Mr Udasi. "But once they come into the RBI, they see the extent of the balance sheet and you're part of a board. So you have a voice, but you have to take "board with you".
Everyone will be watching closely to see how Mr Rajan adapts to the role.
"He is quite young, but a unique situation like India needs unique solutions," says Mr Udasi. "I don't think age has anything to do with it. How he handles the situation, the pragmatism, that will be more important. The next six months will be critical for him to showcase how he's going to handle things."
business@thenational.ae
Expert input
If you had all the money in the world, what’s the one sneaker you would buy or create?
“There are a few shoes that have ‘grail’ status for me. But the one I have always wanted is the Nike x Patta x Parra Air Max 1 - Cherrywood. To get a pair in my size brand new is would cost me between Dh8,000 and Dh 10,000.” Jack Brett
“If I had all the money, I would approach Nike and ask them to do my own Air Force 1, that’s one of my dreams.” Yaseen Benchouche
“There’s nothing out there yet that I’d pay an insane amount for, but I’d love to create my own shoe with Tinker Hatfield and Jordan.” Joshua Cox
“I think I’d buy a defunct footwear brand; I’d like the challenge of reinterpreting a brand’s history and changing options.” Kris Balerite
“I’d stir up a creative collaboration with designers Martin Margiela of the mixed patchwork sneakers, and Yohji Yamamoto.” Hussain Moloobhoy
“If I had all the money in the world, I’d live somewhere where I’d never have to wear shoes again.” Raj Malhotra
THE BIO
BIO:
Born in RAK on December 9, 1983
Lives in Abu Dhabi with her family
She graduated from Emirates University in 2007 with a BA in architectural engineering
Her motto in life is her grandmother’s saying “That who created you will not have you get lost”
Her ambition is to spread UAE’s culture of love and acceptance through serving coffee, the country’s traditional coffee in particular.
JOKE'S%20ON%20YOU
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Squad
Ali Kasheif, Salim Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdulrahman, Mohammed Al Attas, Abdullah Ramadan, Zayed Al Ameri (Al Jazira), Mohammed Al Shamsi, Hamdan Al Kamali, Mohammed Barghash, Khalil Al Hammadi (Al Wahda), Khalid Essa, Mohammed Shaker, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Al Hassan Saleh, Majid Suroor (Sharjah) Walid Abbas, Ahmed Khalil (Shabab Al Ahli), Tariq Ahmed, Jasim Yaqoub (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Muharami (Baniyas)
Votes
Total votes: 1.8 million
Ashraf Ghani: 923,592 votes
Abdullah Abdullah: 720,841 votes
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
COMPANY%20PROFILE
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Company%C2%A0profile
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The%20pillars%20of%20the%20Dubai%20Metaverse%20Strategy
%3Cp%3EEncourage%20innovation%20in%20the%20metaverse%20field%20and%20boost%20economic%20contribution%3C%2Fp%3E%0A%3Cp%3EDevelop%20outstanding%20talents%20through%20education%20and%20training%3C%2Fp%3E%0A%3Cp%3EDevelop%20applications%20and%20the%20way%20they%20are%20used%20in%20Dubai's%20government%20institutions%3C%2Fp%3E%0A%3Cp%3EAdopt%2C%20expand%20and%20promote%20secure%20platforms%20globally%3C%2Fp%3E%0A%3Cp%3EDevelop%20the%20infrastructure%20and%20regulations%3C%2Fp%3E%0A
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3ESmartCrowd%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2018%0D%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3ESiddiq%20Farid%20and%20Musfique%20Ahmed%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%20%2F%20PropTech%0D%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%20%3C%2Fstrong%3E%24650%2C000%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%3C%2Fstrong%3E%2035%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3ESeries%20A%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EVarious%20institutional%20investors%20and%20notable%20angel%20investors%20(500%20MENA%2C%20Shurooq%2C%20Mada%2C%20Seedstar%2C%20Tricap)%3C%2Fp%3E%0A
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Match info
Uefa Nations League Group B:
England v Spain, Saturday, 11.45pm (UAE)
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
The%20new%20Turing%20Test
%3Cp%3EThe%20Coffee%20Test%3C%2Fp%3E%0A%3Cp%3E%3Cem%3EA%20machine%20is%20required%20to%20enter%20an%20average%20American%20home%20and%20figure%20out%20how%20to%20make%20coffee%3A%20find%20the%20coffee%20machine%2C%20find%20the%20coffee%2C%20add%20water%2C%20find%20a%20mug%20and%20brew%20the%20coffee%20by%20pushing%20the%20proper%20buttons.%3C%2Fem%3E%3C%2Fp%3E%0A%3Cp%3EProposed%20by%20Steve%20Wozniak%2C%20Apple%20co-founder%3C%2Fp%3E%0A
Sinopharm vaccine explained
The Sinopharm vaccine was created using techniques that have been around for decades.
“This is an inactivated vaccine. Simply what it means is that the virus is taken, cultured and inactivated," said Dr Nawal Al Kaabi, chair of the UAE's National Covid-19 Clinical Management Committee.
"What is left is a skeleton of the virus so it looks like a virus, but it is not live."
This is then injected into the body.
"The body will recognise it and form antibodies but because it is inactive, we will need more than one dose. The body will not develop immunity with one dose," she said.
"You have to be exposed more than one time to what we call the antigen."
The vaccine should offer protection for at least months, but no one knows how long beyond that.
Dr Al Kaabi said early vaccine volunteers in China were given shots last spring and still have antibodies today.
“Since it is inactivated, it will not last forever," she said.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Result
2.15pm: Maiden Dh75,000 1,950m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.45pm: Handicap Dh80,000 1,800m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.
3.15pm: Handicap Dh85,000 1,600m; Winner: Native Appeal, Adam McLean, Doug Watson.
3.45pm: Handicap Dh115,000 1,950m; Winner: Conclusion, Antonio Fresu, Musabah Al Muhairi.
4.15pm: Handicap Dh100,000 1,400m; Winner: Pilgrim’s Treasure, Tadhg O’Shea, Satish Seemar.
4.45pm: Maiden Dh75,000 1,400m; Winner: Sanad Libya, Richard Mullen, Satish Seemar.
5.15pm: Handicap Dh90,000 1,000m; Winner: Midlander, Richard Mullen, Satish Seemar
