Nirmita .

Y Assignment 1 Raghuram Rajan

Leadership Studies -1
Semester 2

MBA 2013-2015

1. Brief History of the personality- Raghuram Rajan Born on February 3 1963 at Bhopal India, Raghuram Rajan natively belongs to Tamil Nadu.His Father Govind Rajan was a Senior Bureaucrat in Indian Government. He did Electrical Engineering from IID Delhi, MBA from IIM Ahmedabad and PhD from MIT. He was Gold Medalist both at IIT Delhi and IIM Ahmedabad. He is married to Radhika Rajan. Raghuram Govind Rajan was a Gold Medalist both at IIT Delhi and IIM Ahmedabad from where he did PGDBA. He obtained his PhD from Massachusetts Institute of Technology. He is considered a rockstar economist and only one who can steer India at this hour of crisis. He was one of the First economists to predict the 2008 Recession and would be the Youngest to be the RBI Governor. During early days of his career he worked at Booth School of Business at the University of Chicago. Later he was appointed Chief economist at the International Monetary Fund. He also served as the president of the American Finance Association. Last year he was appointed as Chief Economic Advisor to the Ministry of Finance, Government of India. On September 4 he would take over as the next Governor of Reserve Bank of India. He also serves as Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. Rajan is also a visiting professor for the World Bank, Federal Reserve Board, and Swedish Parliamentary Commission.Raghuram Rajan has received several awards in past. He was the inaugural recipient of the Fischer Black Prize awarded by the American Finance Association for contributions to the theory and practice of finance by an economist under age 40. In a 2011 poll in The Economist, Dr. Raghuram Rajan was ranked by his peers as the economist with the most important ideas for a post-crisis world. He was also awarded with Infosys Science Foundation award in the same year.In 2013, the Center for Financial Studies (CFS) has awarded the 5th Deutsche Bank Prize in Financial Economics to Raghuram G. Rajan for his highly influential contributions in a remarkably broad range of areas in financial economics. Rajan has a highly acclaimed track of work record. He published Saving Capitalism from the Capitalists,along with Chicago Booth professor Luigi Zingales in 2004. In 2005 he predicted an upcoming recession when he delivered his controversial paper, Has Financial Development Made the World Riskier?, at US Federal Reserve. Rajan argued that financial sector managers were encouraged to take risks that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time. He was heavily criticized for this. Former U.S. Treasury Secretary and former Harvard President Lawrence Summers called his warnings as misguided and Rajan a luddite. But after 2008, even The Wall Street Journal accepted his ideas.In 2009, he made an Academy Award winning documentary Inside Job which earned him more global acclamation and fanfare.In 2010, he published Fault Lines: How Hidden Fractures Still Threaten the World Economy which won the Financial Times and

Goldman Sachs Business Book of the Year Award for 2010.In 2012, he published The True Lessons of the Recession; The West Cant Borrow and Spend Its Way to Recovery.

2. Leadership highlights How Rajan Predicted the 2008 Financial Crisis: Rajan had planned to present at the Symposium an analysis of how derivatives and other financial innovations lowered risk. Like everyone else, he thought that banks shed risk by selling their mortgage-backed securities and collateralized debt obligations to investors on the secondary market. Instead, he found that banks were holding onto these derivatives to boost their own profit margins. He warned that, if an unexpected "black swan" event occurred, banks' exposure to these derivatives could cause a crisis similar to the LTCM hedge fund crisis, and for similar reasons. Rajan pointed out, "The inter-bank market could freeze up, and one could well have a full-blown financial crisis." The audience scoffed at his warnings, and then-Harvard University President and economist Lawrence Summers called Rajan a Luddite. However, Rajan's prediction is exactly what happened two years later. (Source: Economic Times Economist Raghuram Rajan Risked Reputation to Predict Credit Crisis, June 9, 2010) Rajan Predicts Future Crises: Dr. Rajan warns that the economic fault lines that created the financial crisis still threaten the world economy. He warns, "We risk going from bubble to bubble." These fault lines are: Political response to income inequality in the U.S. - Many politicians continue to push easy credit so Americans can buy a better standard of living. Instead, they should focus on educating those without college degrees, who suffer more from unemployment. These now include the structurally unemployed and older workers. Trade imbalances - China and other emerging markets rely on U.S. demand to fuel export-driven growth. They buy U.S. Treasuries, keeping interest rates low and protecting Americans from the consequences of too much debt. Financial reward systems - Banks still pay and promote managers for generating above-average returns, which can only gotten by taking on additional risks. The costs of those risks are spread throughout the economic system, and are ultimately born by taxpayers through government bailouts.

3.What impact the person has had on you till date?What qualities would help augmemt your leadership personality? The qualities that would augment my leadership personality are : Step up and be firm For a nation starved of leaders, here was one who stepped up and claimed his space. This was the right thing to do for a leader. He also used the chance to set his agenda before the forces of consensus, negotiation and circumstance began to weigh in on his actions. Transparency and improved communications are achievements that his predecessor can lay some claim to as well RGR takes it to the next level, and comfortably makes it his own. Lean on predecessors and strong team mates A good leader is as good as his team. RGR co-opts not just the present but also past achievers to support him in his (grand) endeavour. An outsider to the system, RGR knows he cannot navigate it alone. Calling on colleagues within the RBI, setting up committees with known and respected thinkers and doers to lead them, RGR already has a program in place even before he starts work. Think Straight - details and people Professor Rajans key strength is his analytical ability. For his policies to work, he needs to be able to reach those who churn and multiply the rupee. He states that as a priority. To include more people, you have to make it easy for them - Bank Branches. Mountain, reach Mahomet. This is priority two. He sets it straight up at the top of his agenda. Popular, clean, few barriers. Acknowledge the tough choices but not dwell on them RGR does not shy from speaking of the elephant on the table - NPAs. The hollow nature of bank balance sheets has been an area of concern for a few years, with little being done to remedy the problem. Even if it becomes one of his intractables, the intent is stated upfront, and, at the very least shows willingness to tackle a tough problem. Look ahead - plan for the years beyond the current doldrums As a good leader should, RGR focuses on the long term. Having spoken of specifics in the near term and created enough of a shake up to move the ship out of the doldrums, he leads the conversation to the time when all problems are solved and we can look forward to changes that are necessary. Not afraid of taking risks, he adds, not changing is even riskier. RGR has the classical tasks of a hero ahead of him.

4. How will it encourage you in future, how do you plan to imbibe the leadership experience in your life? Therefore considering the inspiration from the leadership traits that he has displayed which also include pragmatism, foresight and courage ,Step up and be firm, Lean on predecessors and strong team mates, Think Straight - details and people, Acknowledge the tough choices but not dwell on them, Look ahead - plan for the years beyond the current doldrums, I would like to imbibe the above traits and display pragmatism in all the decisions that I take with respect to my day to day life, have a birds eye and foresee the hardships and difficulties coming my way. I would be firm at my decisions and complete the tasks assigned to me. I would be a good team player and lean on predecessors and strong team mates. I will also weigh my responsibilities be it personal front or professional and give equal importance to the minor details and people as well.