Raghuram Rajan, an economics professor at the University of Chicago’s Booth School of Business and former Chief Economist at the IMF, will be India’s next chief economic advisor, the Wall Street Journal reports.Rajan’s appointment could be good news for India, which is currently in a pessimistic mood—partly due to the monsoon, partly due to the growth slowdown. Meanwhile, the recent blackouts have only worsened the sense of political paralysis in the coalition.But working against the dour mood are some hopes: that states might open themselves to foreign investors, and that the obvious problems faced by India will concentrate the government’s mind on the need for action.With luck, Rajan will be a major facilitator of this action. He will likely be be a strong advocate of many of the changes India needs, away from the remnants of the government-controlled “license raj” economy (or what he calls the resource raj). He is an outspoken advocate of free markets and an enemy of corruption, bureaucracy, and state subsidies. If he continues to promote these ideas in office and possesses the political savvy necessary to pull them off, India stands to reap serious benefits.It will be good for India to have someone like Rajan behind the wheel, but his work will not be easy in India’s notoriously messy political culture. The Economist outlines the difficult task that lies ahead for him:
Mr Rajan will have to bite his tongue and polish his political skills. The trick, according to Mr Basu, is to win the confidence of politicians across the spectrum and communicate economic ideas simply and clearly. Mr Rajan is not a novice at the finer skills of working the Indian establishment, having chaired a government-commissioned committee in 2009 that looked into financial reform. Nor can he be unaware of the task ahead: that report’s recommendations were largely ignored
Rajan is taking a big risk in coming out of the ivory tower to serve his country, but sometimes that is what patriots need to do. Anybody who cares about the fate of hundreds of millions of Indians trapped in grinding poverty should be wishing him well.