Central bank governor of the year 2014: Rajan emerges unscathed from Indian baptism of fire

Reserve Bank of India governor Raghuram Rajan’s tough monetary medicine combatted the storm ravaging the deficit-ridden economy in the recent emerging market crisis. Now, he is battling vested interests to arouse a sleepy financial system for over one billion people.

The most effective modern central bankers deploy an old-fashioned virtue in the teeth of market distress: stoic calm. Few, however, have articulated this ethic with as much clarity and charm during a trial by fire as Indian central bank governor Raghuram Rajan. As Fed-tapering fears triggered investors to punish India for its fiscal and current-account deficits last year, Rajan, during his maiden speech on September 4, cited excerpts from Rudyard Kipling's classic poem 'If' as a paean to the steely resolve of a central banker.

As he confronted capital outflows, the rupee at record lows, and over-blown, but palpable, fears India was marching towards an Asia-crisis-style abyss, Rajan duly administered tough monetary medicine to ailing bond and currency markets.

Remarkably, the internationally-renowned economist, who earned acclaim for his warnings in 2005 of an upcoming global crisis of sorts, has, for the past year, been true to...