Raghuram Rajan to take over as new chief economic advisor

Former International Monetary Fund chief economist Raghuram Rajan has been appointed as the new chief economic advisor (CEA). The position of the CEA has been lying vacant since Kaushik Basu's term ended on July 31. Basu would now return as a professor in Cornell University.

The Appointments Committee of the Cabinet approved his name on Friday, a finance ministry source said.

A selection panel headed by the Prime Minister's Economic Advisory Council Chairman, C Rangarajan, had recommneded Rajan after going through 18 applications. Rajan, an honorary economic adviser to Prime Minister Manmohan Singh, had not applied for the position.

Despite his illustroius career, Rajan really shot into prominence for his 2005 paper "Has Financial Development Made the World Riskier?". A prescient publication presented at the US Federal Reserve, Rajan's paper explained in detail the crisis the was to shake the world economy in 2007-08.

In 2010, he was named by Foreign Policy magazine to its list of top global thinkers. In a poll in The Economist, Rajan ranked first as the economist with the most important ideas in the post-financial crisis world.