50-year-old Rajan, a former chief economist with the International Monetary Fund (IMF) who was economic advisor to the finance ministry, will takeover a difficult assignment from Duvvuri Subbarao on his completing five years in Mint Road.

Rajan has already said that he has no magic wand to face the challenge before the country but would deal with them one at a time.

The Government, which was at the receiving end of Subbarao's unrelenting focus on inflation control at the cost of low interest rates, would hope that the new incumbent would reverse some of those policies.

"We have enough ideas. It is not just the currency, it is financial inclusion, it is growth. I think there is a lot to do. There are challenges in the economy... These things are not going to be overcome overnight. There is no magic wand. But there are undoubtedly solutions to many of the problems that the RBI can tackle and the job is to go ahead and do it.

"We will do it one step at a time. Make sure that it progresses everyday," he told reporters yesterday on his last day of office at the Finance Ministry.

Rajan, who was appointed as the Chief Economic Advisor in the Finance Ministry in August last year, bring to RBI a vast experience gained at the IMF and during the brief stint in the government.

Known for his frank views, Rajan, who will be the 23rd Governor of the Reserve Bank of India (RBI), was acclaimed for predicting the 2008 global financial crisis. In 2005, he had delivered a lecture critical of the financial sector, arguing that a financial disaster might be looming.

PTI