Das should be guided by the country’s interests

The RBI governor must ensure stability, transparency and growth

The appointment of former economic affairs secretary Shaktikanta Das as the Governor of the Reserve Bank of India (RBI) seems to have created a flutter, with everything from his education to his behaviour and performance as a bureaucrat being discussed. Some of this is unfair. Sure, the circumstances of his predecessor’s exit were strange, and brought about, if only partly, by the government, but Mr Das should be judged neither on the basis of who he is nor the circumstances of his appointment. He isn’t the first bureaucrat from the finance ministry to be appointed to RBI. On the contrary, historically, the Indian central bank is a natural progression for senior finance ministry officials. And again, not all who are nominated to the top job in RBI have academic grounding in economics. It also seems a bit unfair to judge him for his views on demonetisation — as a senior bureaucrat in the finance ministry, he couldn’t have criticised a policy of his own government.

What Mr Das should be judged on is how he operates as the RBI’s 25th governor. There have been bureaucrats before him who have ended up on Mint Street because the finance minister of the day thought they would be pliable, only to discover that the Indian central bank is that rare institution which demands and inspires independence of thought and action from its leaders.

Decisions on the quantum of reserves to be held by the central bank, on whether lenders which have weakened themselves through indiscriminate, and sometimes unethical, lending be allowed to continue on this path, on finding a balance between growth and inflation, and on the kind of aid ailing businesses, need have to be taken transparently and openly, and with an eye on the big picture (which is growth, stability, and inflation management as far as RBI is concerned, not electoral compulsions). Mr Das should, therefore, be guided not by what the finance ministry wants but what the country needs. If the behaviour of past Governors is anything to go by, he will be.