In a surprise move, Raghuram Rajan, the governor of India's central bank, has announced his resignation. Rajan was highly regarded by international policymakers and investors, but he had created many enemies in India who resented his status, questioned his understanding of his job and even challenged his understanding of his country. The question now is whether India will remain committed to the policies Rajan advanced, or whether his departure signals a retreat from reform.
Rajan, who will quit when his first three-year term ends in September, was generally acknowledged to be one of the best qualified individuals to ever head the Reserve Bank of India (RBI), the country's central bank. He spent most of his career in the United States, working as an economics professor at the University of Chicago. He served as the first non-Western chief economist at the International Monetary Fund and then returned to India in 2012 to serve as chief economic adviser to the Finance Ministry.
He was named head of the RBI in 2013, appointed by the then ruling Congress party, in a move that was designed to provide instant credibility for an economy under assault from global financial shocks that triggered a sharp devaluation of the Indian rupee. Then, India was considered part of the "Fragile Five"; the economy was shrinking at an annualized rate of 2 percent per quarter, consumer prices were growing 9.8 percent, the rupee had lost 16.6 percent of its value from the previous year and the current account deficit was estimated at 4 percent of its gross domestic product.