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At
40, he is the youngest person to have become chief economist at the
International Monetary Fund (IMF). He is also the first from a developing
country. Before joining the IMF, Raghuram Rajan was the
Joseph L Gidwitz Professor of Finance at the University of Chicago
Graduate School of Business. He has written extensively on economic and
financial matters, and his book Saving Capitalism from the Capitalists has
got rave reviews in India. More recently, in January 2003, he was awarded
the prestigious inaugural Fischer Black Prize by American Finance
Association, given to a person who has contributed the most to a theory
and practise of Q. What exactly is the role of an economic counsellor at the IMF? A. My role as the chief economist in the IMF is basically two fold. First, it is direct the economic research at the IMF and also help make policy makers take the right decisions. Q. As a writer of the path-breaking book, Saving Capitalism from the Capitalists, what do you see as the major problem confronting US capitalism today? A. The biggest problem with the US today is a sense of scepticism with the functioning of the capital market and with issues of corporate governance. Most investors feel a certain sense of betrayal and distrust with so many cases of fraud and scams coming out in the open every day. There is also a sense of fear among the people at large because of the loss of jobs to developing nations. Q. Given the US economy's two good quarters' results, do you see a revival of the US economy? Is it for real? A. In the last two years, the US economy seems to be showing some signs of revival. But whether this revival is sustainable in the long-run is the key issue. The fiscal deficit continues to remain unsustainable, and there have been no effective steps to rein it in. We are keeping our fingers crossed. Q. How do you the build up of India foreign exchange reserves to nearly $108 billion? A. My belief is that India has accumulated more dollars than is necessary, and it is actually hurting its growth prospects. This huge accumulation only shows two things: that India is not buying enough from different countries, and hence there is a need to reduce the import duty, and secondly, not enough investment is being made both at home and abroad. Q. What are your other concerns about India's progress? A. I am worried about the high fiscal deficit, the meagre investment both in physical infrastructure (power, ports and roads) and soft infrastructure (health and education).
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