Deputy to take over as RBI gov­er­nor

The Myanmar Times - - International Business -

THE In­dian gov­ern­ment has named in­sider Ur­jit Pa­tel as the new gov­er­nor of the Re­serve Bank of In­dia, to re­place pop­u­lar cen­tral banker Raghu­ram Ra­jan when his term ends in Septem­ber.

The pro­mo­tion of deputy gov­er­nor Mr Pa­tel ends weeks of fever­ish spec­u­la­tion by the In­dian me­dia since Mr Ra­jan caught in­vestors off-guard in June by an­nounc­ing he was leav­ing to re­turn to academia.

The nam­ing of an in­sider to the top job sug­gests the gov­ern­ment hopes to con­tinue the ap­proach of the muchad­mired out­go­ing chief when he steps down on Septem­ber 4.

One of four RBI deputies, Mr Pa­tel, 52, cur­rently runs the cen­tral bank’s mon­e­tary pol­icy de­part­ment, work­ing closely with Mr Ra­jan, who is cred­ited with tam­ing in­fla­tion and tack­ling In­dia’s moun­tain of soured bank loans.

The chief of the RBI is typ­i­cally cho­sen by the prime min­is­ter in con­sul­ta­tion with the fi­nance min­istry, mak­ing Mr Pa­tel the first gov­er­nor to be cho­sen by right-wing Prime Min­is­ter Naren­dra Modi.

Prior to join­ing the RBI in 2013, Mr Pa­tel was an ad­viser with the Boston Con­sult­ing Group, spent a decade in the fi­nan­cial sec­tor and was a pres­i­dent at In­dian con­glom­er­ate Reliance In­dus­tries.

He has also worked as a con­sul­tant to the Min­istry of Fi­nance.

Like Mr Ra­jan, Mr Pa­tel has the In­ter­na­tional Mon­e­tary Fund on his CV, hav­ing worked at the Fund in the 1990s on desks in­clud­ing the US, Myan­mar and In­dia.

He has a mas­ters in eco­nom­ics from Ox­ford and a PhD in eco­nom­ics from Yale Univer­sity in the US.

Mr Pa­tel was a key ar­chi­tect of a switch to us­ing con­sumer prices in­stead of whole­sale prices to mea­sure in­fla­tion, be­liev­ing them a bet­ter gauge of volatile price changes.

Many economists hail this as one of the most im­por­tant re­forms brought in by the RBI since In­dia’s eco­nomic lib­er­al­i­sa­tion be­gan in 1991.

Many lamented the de­par­ture of Mr Ra­jan, who fa­mously pre­dicted the 2008 global fi­nan­cial cri­sis and whom In­dian news­pa­pers have jok­ingly likened to James Bond.

But al­though in­ter­est rates are at their low­est level since 2011, there have been ten­sions with the rul­ing Bharatiya Janata Party (BJP) which has been push­ing for deeper cuts, say­ing these would boost growth fur­ther.

Ashutosh Datar, chief econ­o­mist, IIFL In­sti­tu­tional Equities, said the ap­point­ment showed a de­sire to con­tinue on the same course.

“Pa­tel’s se­lec­tion is a vote of con­fi­dence by the gov­ern­ment in the mon­e­tary pol­icy ini­tia­tives started by Raghu­ram Ra­jan,” he told AFP.

In­dia’s econ­omy ex­panded by 7.9pc in the fourth quar­ter of 2015-16, the fastest of any large econ­omy, while in­fla­tion has cooled from dou­ble-digit lev­els to around 6pc on Mr Ra­jan’s watch.

The ap­point­ment of Mr Pa­tel, who has spent most of his ca­reer in In­dia, should also ap­pease more stri­dent mem­bers of Mr Modi’s Hindu na­tion­al­ist gov­ern­ment who crit­i­cised Mr Ra­jan – ap­pointed by the pre­vi­ous Congress gov­ern­ment – as too for­eign.

The BJP law­maker Subra­ma­nian Swamy has been crit­i­cal of the 53-year-old Mr Ra­jan, say­ing he was “men­tally not fully In­dian” and telling him to “go back to Chicago” where he used to be a fi­nance pro­fes­sor.

Mr Ra­jan took the reins at the RBI in Septem­ber 2013 at a time when In­dia was strug­gling with a bal­loon­ing cur­rent ac­count deficit, a plum­met­ing cur­rency and decade-low eco­nomic growth. –

Photo: AFP

Deputy gov­er­nor of the Re­serve Bank of In­dia Ur­jit Pa­tel will take over from Raghu­ram Ra­jan next month.

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