Ex-IMF economist who foresaw 2008 crisis Raghuram Rajan to lead Reserve Bank of India

Raghuram Rajan, former chief economist at the International Monetary Fund, has been named as India's next central bank chief, a critical post at a time when the economy is struggling and the Indian rupee is showing increased volatility.

Mr Rajan, who was named chief economic adviser to the Indian finance ministry last year, came to prominence in the aftermath of the financial upheaval of 2008, when attention turned to his August 2005 warning about a potential crisis.

In a paper presented in the US at the annual Jackson Hole conference of economists and central bankers, he had asked if financial developments in the preceding year had made the world a riskier place.

At the time he was criticised, among others, by Larry Summers, the former US Treasury Secretary, who said the basic premises of Mr Rajan's paper seemed to be "misguided". Mr Summers is now among the leading candidates to replace Ben Bernanke as the next head of the US Federal Reserve.

Mr Rajan, pictured, has been appointed by the Indian Prime Minister, Manmohan Singh, to a three-year term as the head of the Reserve Bank of India (RBI) after the incumbent, D Subbarao, completes his tenure next month.

"These are challenging times for the Indian economy," said Mr Rajan following news of his appointment, according to the Press Trust of India. "The Government and the RBI are working together to address these challenges. We don't have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt we will deal with them."