Finance minister clears Rajan's name for CEA

Former International Monetary Fund Chief Economist Raghuram Rajan is set to join the finance ministry as the chief economic advisor (CEA). Finance Minister P Chidambaram is learnt to have cleared his name for the post.

A selection committee, headed by Prime Minister’s Economic Advisory Council Chairman C Rangarajan, had shortlisted Rajan’s name after examining applications of as many as 18 applicants. Rajan, an honorary economic advisor to Prime Minister Manmohan Singh, had not applied for the position, but was picked up by the panel itself.

At present, Rajan is the Eric J Gleacher Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business. He will succeed Kaushik Basu, who demitted office last month after completing his tenure in the finance ministry.

Rajan is set to join the finance ministry at a time when the economy is witnessing a difficult phase, with high inflation and interest rates, slowing GDP growth and industrial production, muted tax collections and widening fiscal deficit.

The finance minister had on Monday announced a blueprint for fixing the economy. He had made it clear that adjustments would be made both on revenue and expenditure sides to rein in fiscal deficit. Indicating some harsh steps ahead, he had asked people to share the burden of fiscal correction.