D Subbarao’s 5- year stint came to an end on Wednesday as Raghuram Rajan took over as the 23rd Governor of the Reserve Bank of India (RBI).With Rajan’s taking over, domestic currency wiped out initial losses and made a smart recovery, rising 56 paise to 67.07 against the dollar, while Sensex surgeD 333 points and closed at 18,567.55.
Market experts said rupee and bourses staged a comeback on apparent hopes pegged on Raghuram Rajan taking over as RBI Governor. “The new RBI Governor will draw upon his global experience to bring the economy back to a higher growth path and mount a more effective defence of the battered rupee,” they added.
Since May, rupee has depreciated by over 20 per cent, the biggest fall as compared to the rest of the Asian economies. Till now all the steps taken by the Government and the RBI have failed to stop the slide.
Among the youngest Governors, Rajan is 50 years old and previously has served as chief economist at the International Monetary Fund and was most famous for predicting the 2008 global financial crisis. Before taking the up the post of Governor RBI, he held the post of Chief Economic Advisor to the Prime Minister .
Subbarao had taken the post of Governor exactly five years back on September 5, 2008. In the last five years a lot has change in the Indian economy. Back then, India’s forex reserve was `12,80,950 crore which now in 2013 stands at `17,89,110 crore. While the forex reserve has grown, the exchange rate has plummeted. During September 2008, rupee was trading around `44 per dollar but in the current stage is fell by over 52 per cent to `66.90 per dollar.
Similar story is with the country’s GDP numbers which have fallen to 4.4 per cent in the first quarter of FY14 as compared to 7.5 per cent in Q1 FY09. While the currency and GDP has fallen, interest rates have shot up in the last five years. When Subbarao became the Governor, the interest rates were at 6 per cant and now when Rajan has taken over, the interest rates are high at 10.25 per cent.