By Vivienne Russell | 7 August 2013

Raghuram Rajan, a former International Monetary Fund chief economist, has been appointed governor of the Reserve Bank of India, the Indian government has confirmed.

Rajan will serve for a three-year term, beginning on September 4. He replaces Duvvuri Subba Rao, who will have come to the end of his tenure.

Rajan is currently the Ministry of Finance’s chief economic adviser and is known for having predicted the 2008 financial crisis. He takes up the post as India is struggling with a large current account deficit, the  rupee slumping against the dollar and sluggish economic growth.

Rajan said it was a ‘great honour’ to take on the job of governor at the Reserve Bank, describing it as a ‘great institution with a tradition of integrity, independence and professionalism’.

He added: ‘These are challenging times for the Indian economy, though no one can have any doubt about the country’s promise. The government and the Reserve Bank are working together to address these challenges.

‘We do not have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt that we will deal with them.’