(Reuters) - The government has appointed Raghuram Rajan, the chief economic adviser in the finance ministry, to be the next governor of the Reserve Bank of India for a three year term, a statement by the finance minister said on Tuesday.
Rajan will replace Duvvuri Subbarao, whose tenure ends on September 4 after five years.
COMMENTARY
NAVNEET MUNOT, CHIEF INVESTMENT OFFICER, SBI MUTUAL FUND, MUMBAI
"RBI has multiple objectives and several times they are at odds with each so it's very difficult to say at this stage if this person will be hawkish or dovish, but given his background and stature, this should send the right signal to investors."
ROBERT PRIOR, WANDESFORDE, ECONOMIST, CREDIT SUISSE, SINGAPORE
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"He is a highly credible, experienced economist. He has no central banking background so it will be a steep learning curve. Effective credible communication with market is an important part of the job.
"The jury is out on his monetary policy views. My assumption is he will be pragmatic. Hopefully he will be a safe pair of hands."
SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI, MUMBAI
"Rajan has previously worked with RBI as a consultant and with the government. He also has international experience with the IMF. I would think he would have a holistic view.
"He is familiar with Indian policy circles and has ground feel. We have seen people like Stanley Fischer (Israel) have played a good role as governor after coming from IMF.
"He is clearly emphasizing the need to bring back growth. He will be more pro-growth."
A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI
"We welcome the move. This will give lot of confidence to the market since he is a well respected economist.
"I expect Dr. Rajan to take more steps for bond market development, set up the monetary policy committee to formulate monetary policy and separate the debt management functions of RBI, as part of these were his own recommendations.
"I expect these to happen over a period of 18-36 months. His international experience will stand him in good stead to fulfill RBI's mandate."
RADHIKA RAO, ECONOMIST, DBS, SINGAPORE
"This appointment is a positive development for the markets though it would be premature to assume that this change will mark a reversal in policies.
"The new appointee will be taking over the mantle at a challenging juncture and weighing inflationary risks, rupee depreciation and growth headwinds, he might also lean towards status quo on the rates front. Nonetheless some stop-gap measures to plug rupee depreciation might be resorted to in a bid to calm the markets."
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
"Given the concerns on the external sector, the policy focus will essentially remain the same, that of containing the volatility in the rupee without jeopardizing growth in the medium to long term. While we still believe that with stability returning to foreign exchange markets, there is a case for rate cuts to spur growth and we hold on to our view of 50 bps (cut) for the rest of the year."
SIDDHARTHA SANYAL, INDIA ECONOMIST, BARCLAYS, MUMBAI:
"Raghuram Rajan seems to be maintaining a growth supportive stance in the medium term. In the long run, expectations will be there that he will lead further development of various segments of the financial markets.
"In the last two months, he has been taking a key role on rupee-related steps, and his appointment as the governor will lift expectations of constructive and positive steps to lift the rupee."
(Reporting by India treasury and markets teams)