When Raghuram Rajan took the helm of the Reserve Bank of India three years ago, India had a plummeting currency, galloping inflation and a soaring current account deficit — a crisis many economists blamed on poor decisions by the central bank itself.
In grappling with these problems, Rajan, a confident former IMF chief economist with a secure professorship at the University of Chicago, set out to shake up an institution previously led by low-profile, career bureaucrats considered susceptible to political pressure from New Delhi.
He overhauled the RBI monetary policy framework, instituting a new inflation-targeting regime to replace previous ad hoc decision-making. He forced banks to tackle billions of dollars in distressed corporate loans, discomfiting powerful tycoons accustomed to fending off their creditors through politician friends in New Delhi.
But Rajan's hawkish approach to inflation and bad debts had plenty of public critics, including from within Prime Minister Narendra Modi's administration, who accused him of holding back economic growth.