The document more relevant to India is the Report of the Committee on Financial Sector Reforms in India ("One hundred small steps", Ministry of Finance, 2008) for which he was responsible.
This actually has a much more optimistic attitude to financial deregulation and suggests quite far-reaching financial liberalisation of the Indian financial system, in ways that could create the very structure of misplaced incentives that Rajan critiqued in the US.
According to that Report, "excessive regulatory micromanagement leads to a counter-productive interaction between the regulator and the regulated" and so the Government of India should "rewrite financial sector regulation, with only clear objectives and regulatory principles outlined."
After specifying only a limited inflation targeted approach for the Reserve Bank of India, the Report suggests the following measures for the Government of India: steadily open up investment in the rupee, corporate and government bond markets to foreign investors, strengthen bank boards and then delink banks from additional government oversight, including by the Central Vigilance Commission and Parliament; be more liberal in allowing takeovers and mergers; stop creating investor uncertainty by banning markets; create a more innovation-friendly environment, speeding up the process by which products are approved; and allow greater participation of foreign investors in domestic markets.
Not just the US, but many emerging market governments have been there, tried that and lost their shirts in the process of implementing just these policies of financial liberalisation.
Of course this does not happen immediately: usually such financial liberalisation first results in a boom that creates a (false) sense of economic dynamism before it ends in the inevitable crash.
If this is the possible trajectory that the new Chief Economic Advisor will push for, then it may be that a few years from now we will have other analysts talking about the skewed incentives in India that led to what might end in the coming financial crash.
A failed Finance Minister as President!
Other columns by Dr Jayati Ghosh:
World economy in 2011: Fragile and seeking miracles
Why India won't feel like celebrating this Independence Day
Global turmoil and the threats it holds for the Indian economy
The scariest thing about the world economy
Is Europe rushing headlong into economic destruction?
The finance minister has failed the common man