NEW DELHI India has appointed Raghuram Rajan, the outspoken former chief economist to the International Monetary Fund who is critical of the government's economic management, as its top adviser at the finance ministry, two government sources said on Friday.
Rajan, who is famed for flagging the risks that led to the global financial crisis, would work alongside Finance Minister Palaniappan Chidamabaram, one of the architects of India's economic liberalisation in the 1990s.
“The order has been issued to appoint Raghuram Rajan as chief economic adviser,” one of the sources said. Rajan currently teaches at University of Chicago's Booth School of Business. He was not immediately available for comment at his office at the university.
The source said he did not know when Rajan would take up his new role in New Delhi. In a speech to Prime Minister Manmohan Singh earlier this year, Rajan warned that India was spending too much on subsidies without implementing reforms to boost growth in the economy.
He said corrupt relationships between politicians and businessmen were creating an oligarchy.
India's economy is growing at its slowest rate in nearly a decade, the rupee currency is depreciating and inflation and interest rates are high. Global ratings agencies Fitch and Standard and Poor's have said India risks losing its investment grade sovereign rating if it does not tackle wide fiscal and current account deficits.
Rajan is the author of two books, Saving Capitalism from the Capitalists and Fault Lines, which won the Financial Times Business Book of the Year award in 2010.