Raghuram Rajan

Raghuram Rajan
Born	Raghuram Govind Rajan 3 2, 1963
Birthplace	Bhopal, Madhya Pradesh, India
Nationality	Indian
Occupation	Economist, academic, central banker
Title	Katherine Dusak Miller Distinguished Service Professor of Finance
Employer	University of Chicago Booth School of Business
Known for	23rd Governor of the Reserve Bank of India; Chief Economist of the IMF; prescient warning of the 2008 financial crisis
Education	Indian Institute of Technology Delhi (BTech)
Spouse(s)	Radhika Puri
Awards	Fischer Black Prize (2003), Financial Times/Goldman Sachs Business Book of the Year (2010), Deutsche Bank Prize in Financial Economics (2013)

Raghuram Govind Rajan (born 3 February 1963) is an Indian economist and academic who holds the Katherine Dusak Miller Distinguished Service Professor of Finance position at the University of Chicago's Booth School of Business. He served as the 23rd Governor of the Reserve Bank of India (RBI) from September 2013 to September 2016, the Chief Economic Adviser to the Government of India from August 2012 to September 2013, and the Chief Economist of the International Monetary Fund (IMF) from 2003 to 2007. In 2015, during his tenure at the RBI, he was appointed Vice-Chairman of the Bank for International Settlements. Rajan gained international recognition for his 2005 warning at the Federal Reserve's annual Jackson Hole conference that growing risks in the financial system could precipitate a major crisis — a prediction that proved accurate when the 2008 financial crisis unfolded three years later. In 2003, he became the youngest recipient of the inaugural Fischer Black Prize, awarded by the American Finance Association to the financial economist under the age of 40 who has made the most significant contribution to the theory and practice of finance. His book Fault Lines: How Hidden Fractures Still Threaten the World Economy won the Financial Times/Goldman Sachs Business Book of the Year award in 2010.

Early Life

Raghuram Govind Rajan was born on 3 February 1963 in Bhopal, the capital city of Madhya Pradesh, India. His father was an officer in the Indian intelligence services, and the family moved frequently during Rajan's childhood due to his father's postings across India and abroad, including stints in Sri Lanka, Indonesia, and Belgium. This peripatetic upbringing exposed Rajan to a variety of cultures and educational systems from an early age. Speaking to students in New Delhi, Rajan recalled that he did not own a blazer during his school years, reflecting the modest circumstances in which he grew up despite his father's government position.

Rajan's early education took place at schools in multiple countries as the family relocated. These experiences of moving between nations and observing different economic systems are often cited as having shaped his later intellectual interests in development economics and international finance. He eventually settled in India for his higher education, attending the Indian Institute of Technology Delhi (IIT Delhi), one of India's most competitive engineering institutions.

Education

Rajan earned his Bachelor of Technology (BTech) degree in Electrical Engineering from the Indian Institute of Technology Delhi. He subsequently pursued further studies in management and economics. He obtained a post-graduate degree from the Indian Institute of Management Ahmedabad (IIM Ahmedabad), one of the foremost business schools in India. After completing his studies in India, Rajan moved to the United States, where he earned his PhD in Management from the MIT Sloan School of Management at the Massachusetts Institute of Technology. His doctoral research focused on the role of banks in the financial system, a theme that would recur throughout his subsequent academic and policy career.

Career

Academic Career at the University of Chicago

Following the completion of his doctoral studies at MIT, Rajan joined the faculty of the University of Chicago's Graduate School of Business (now the Booth School of Business), where he would build a distinguished academic career spanning several decades. He rose through the ranks to become the Joseph L. Gidwitz Professor of Finance before being named the Katherine Dusak Miller Distinguished Service Professor of Finance, a position he continues to hold. At Chicago Booth, Rajan's research focused on banking, corporate finance, and economic development. He became one of the most cited financial economists in the world, with his academic papers on the role of financial institutions, the relationship between finance and economic growth, and the political economy of development influencing both scholarship and policymaking.

Rajan co-authored numerous influential academic papers and produced several books that bridged the gap between academic finance and public policy discourse. His research at Chicago explored fundamental questions about why financial systems develop the way they do, how power relationships within firms affect financing decisions, and how financial development affects economic inequality.

Chief Economist of the International Monetary Fund

In September 2003, Rajan was appointed the Chief Economist and Director of Research at the International Monetary Fund, succeeding Kenneth Rogoff in the role. At the age of 40, he was the youngest person to hold the position. During his tenure, which lasted until January 2007, he oversaw the IMF's research department and contributed to the institution's analysis of global economic trends and financial stability risks.

It was during this period that Rajan delivered what would become one of the most notable presentations in the history of modern finance. At the Federal Reserve Bank of Kansas City's annual economic symposium at Jackson Hole, Wyoming, in August 2005 — a conference organized to honor retiring Federal Reserve Chairman Alan Greenspan — Rajan presented a paper titled "Has Financial Development Made the World Riskier?" In the paper, Rajan argued that financial innovation, including the proliferation of complex derivatives and securitized products, was creating significant and underappreciated risks in the global financial system. He warned that incentive structures in the financial industry encouraged excessive risk-taking and that the system had become more prone to catastrophic failure even as it appeared more stable on the surface.

The paper was met with sharp criticism from several prominent economists and policymakers at the time. Former U.S. Treasury Secretary Lawrence Summers dismissed Rajan's warnings as "misguided" and characterized Rajan as a "luddite" who was resistant to beneficial financial innovation. Many attendees at the conference, which was held during a period of robust economic growth and rising asset prices, viewed Rajan's concerns as overly pessimistic.

Three years later, the 2008 financial crisis — triggered in large part by the very mechanisms Rajan had identified — validated his analysis. The collapse of the subprime mortgage market, the failure of major financial institutions, and the ensuing global recession demonstrated the accuracy of his warnings about systemic risk in the financial sector. Rajan was subsequently interviewed extensively for Inside Job, the Academy Award-winning documentary directed by Charles Ferguson that chronicled the causes of the financial crisis.

After the crisis, Rajan wrote extensively about its causes and lessons. His article "The True Lessons of the Recession" in Foreign Affairs argued that the crisis had deep structural roots, including rising inequality and political pressures to expand credit access to compensate for stagnant wages among lower-income groups. He also wrote for Project Syndicate on topics including central banking policy and global employment challenges.

Chief Economic Adviser to the Government of India

On 10 August 2012, Rajan was appointed the Chief Economic Adviser (CEA) to the Government of India, serving under Prime Minister Manmohan Singh. In this capacity, he advised the Finance Ministry on economic policy and played a role in shaping India's response to slowing economic growth, a depreciating rupee, and a widening current account deficit. His appointment was seen as a signal that the Indian government was seeking credible, internationally recognized economic expertise to address mounting challenges.

During his approximately one-year tenure as CEA, Rajan was instrumental in formulating policy recommendations aimed at stabilizing the Indian economy. He was considered a leading candidate for the position of RBI Governor even before his appointment as CEA, with Indian media reporting on his inclusion in shortlists for the central bank leadership role as early as 2012. He succeeded Kaushik Basu as CEA and was himself succeeded by Arvind Subramanian when he moved to the RBI.

Governor of the Reserve Bank of India

On 6 August 2013, Rajan was announced as the 23rd Governor of the Reserve Bank of India, and he assumed office on 4 September 2013, succeeding Duvvuri Subbarao. He took charge during a period of considerable economic turbulence for India. The Indian rupee had been depreciating sharply, inflation was elevated, the current account deficit was at concerning levels, and investor confidence was fragile.

In his first public address as Governor, Rajan outlined an ambitious agenda for financial sector reforms and signaled his intention to pursue a more transparent and predictable monetary policy framework. He announced a series of immediate measures to stabilize the currency and financial markets, which were received positively by markets and investors alike.

During his three-year tenure, Rajan pursued several significant policy initiatives. He adopted an inflation-targeting framework for monetary policy, a departure from the RBI's previous approach that had sought to balance multiple objectives simultaneously. This framework, which set a formal consumer price inflation target, was seen as bringing the RBI more in line with international best practices for central banking. Rajan also took steps to address the problem of non-performing assets (NPAs) in the Indian banking system, initiating an asset quality review that required banks to more accurately classify and provision for bad loans. While this process revealed the true extent of distress in the banking sector and led to short-term pain for several banks, it was regarded as a necessary step toward restoring the health of the financial system.

Rajan's approach to monetary policy earned him the description of a "surgical striker" from financial media, a reference to his precise and targeted interventions in the currency and bond markets. His tenure saw a significant reduction in consumer price inflation, a stabilization of the rupee, and an improvement in India's macroeconomic fundamentals. Foreign exchange reserves increased substantially during his time in office.

In 2015, while serving as RBI Governor, Rajan was appointed Vice-Chairman of the Bank for International Settlements (BIS), the central bank for central banks headquartered in Basel, Switzerland. This appointment underscored his standing in the global central banking community.

Rajan's tenure at the RBI was not without controversy. His willingness to speak on matters beyond the traditional purview of the central bank — including remarks on tolerance, academic freedom, and the importance of open debate — drew criticism from some political figures. In June 2016, Rajan announced that he would not seek a second term as RBI Governor and would return to academia at the University of Chicago when his three-year term expired in September 2016. He was succeeded by Urjit Patel.

Return to Academia and Continued Public Engagement

After leaving the RBI in September 2016, Rajan returned to the University of Chicago Booth School of Business, where he resumed his position as the Katherine Dusak Miller Distinguished Service Professor of Finance. He continued to be an active voice in global economic debates, writing and speaking on topics including the future of central banking, the risks of financial innovation, and the structural challenges facing emerging economies.

In 2019, Rajan published The Third Pillar: How Markets and the State Leave the Community Behind, a book that explored the relationship between markets, the state, and local communities, arguing that healthy societies require a balance among all three and that the erosion of community structures contributes to economic and social dysfunction.

Rajan has continued to contribute to policy discussions through various platforms. Writing for the IMF's Finance & Development magazine, he argued for the necessity of global cooperation in managing cross-border capital flows, noting both the benefits and risks they present. He also published an essay in the same publication arguing that central banks should adopt a more focused and less interventionist approach, suggesting that institutions that try to do too much may compromise their core mandates.

In more recent years, Rajan has commented on a range of global economic issues. In late 2025, he warned about the risks posed by the proposed U.S. HIRE Act to India's outsourcing and service export sectors, arguing that the legislation could have a more significant impact than changes to the H-1B visa program. He also voiced concerns about excess liquidity building up in private credit markets globally, warning of rising risks in that sector. Commenting on Indian economic policy ahead of the 2026 Union Budget, Rajan urged the government to prioritize long-term economic strategy during what he described as "an extremely dangerous time" for India.

Personal Life

Raghuram Rajan is married to Radhika Puri, who is also an academic. The couple has children. Rajan has maintained a relatively private personal life despite his high public profile. He holds Indian nationality and has lived and worked in both India and the United States throughout his career.

In public appearances, Rajan has spoken about his modest upbringing, noting that his family moved frequently during his childhood due to his father's postings in the Indian intelligence services. In a talk to students in New Delhi, he recalled not owning a blazer during his school years, an anecdote he shared to illustrate the value of perseverance and the importance of not being defined by material circumstances.

Recognition

Rajan has received numerous awards and honors throughout his career. In 2003, he received the inaugural Fischer Black Prize from the American Finance Association, awarded biennially to the financial economist under the age of 40 who has made the most significant contribution to the theory and practice of finance. This award established him as one of the leading financial economists of his generation.

In 2010, his book Fault Lines: How Hidden Fractures Still Threaten the World Economy won the Financial Times/Goldman Sachs Business Book of the Year award, one of the most prominent literary prizes in the business and economics genre. The book, which analyzed the deep structural causes of the 2008 financial crisis, was praised for its accessible treatment of complex economic issues and its argument that rising inequality was a root cause of the crisis.

In 2013, Rajan received the Deutsche Bank Prize in Financial Economics, an award that recognized his fundamental contributions to research in the areas of banking, corporate finance, and economic development.

In 2015, Rajan was named Central Bank Governor of the Year by Central Banking magazine, in recognition of his stewardship of the Reserve Bank of India during a challenging period for the Indian economy.

In 2016, Time magazine included Rajan in its annual list of the 100 Most Influential People in the World, reflecting his impact on global economic policy and public discourse.

Legacy

Raghuram Rajan's legacy is shaped by his contributions across three domains: academic research, international policy, and Indian central banking. As an academic, his research on the relationship between financial development and economic growth, on the role of banks as monitors and information producers, and on the political economy of finance has influenced generations of scholars and policymakers. His work with co-authors on topics such as the effects of financial development on inequality and the relationship between access to finance and economic opportunity has been foundational in the field.

His 2005 Jackson Hole warning about systemic risk in the financial system — and its subsequent vindication by the 2008 crisis — established him as one of the few economists who correctly identified the dangers of unchecked financial innovation before they materialized. This episode is frequently cited in discussions about the limitations of economic orthodoxy and the importance of dissenting voices in policy debates.

As Governor of the Reserve Bank of India, Rajan's introduction of an inflation-targeting framework, his efforts to clean up bank balance sheets through the asset quality review, and his advocacy for institutional independence at the central bank left a lasting imprint on Indian monetary policy. His tenure is often discussed in the context of the evolution of central banking in India, with commentators noting that his policies helped reduce inflation, stabilize the currency, and improve the credibility of the RBI as an institution.

Through his books — Saving Capitalism from the Capitalists (co-authored with Luigi Zingales), Fault Lines, and The Third Pillar — Rajan has contributed to broader public debates about the relationship between markets, government, and society. His argument that capitalism works best when complemented by strong communities and inclusive institutions has resonated across political and ideological lines.

Rajan continues to shape economic thinking through his academic work at the University of Chicago and his commentary on global financial and economic trends, remaining one of the most recognized and frequently consulted economists in the world.