Growth vs inflation

Raghuram Rajan has to decide how he is going to balance growth and inflation. Though WPI inflation is at a 4-year low, CPI inflation is in near double digits. Cutting repo rates will help growth, but, would also push inflation higher. A real predicament for the new Governor.

Calming the forex markets

While the rupee has plunged to a new historic low, Rajan would like to calm the volatility in the forex markets. It's not about preventing a rout on the rupee, but, more about reducing volatility, which scares foreign investors. 

A big effort needed

Raghuram Rajan would have to oversee the grant of new banking licences and rules associated therewith. This is certainly not an easy task, though, it may seem so.

Encouraging dollar inflows

Rajan would have to look at encouraging dollar flows into the Indian markets to help support the falling rupee. Over teh last couple of months, billions of dollars have exited from the Indian stock and debt markets. 

Growth at a decade low

Economic growth rates had only recently touched a new decade low. Through Monetary Policies the RBI governor can help support growth, though, bulk of the job would have to be done from the government's end.