India names Modi ally as new central bank chief

MUMBAI: India’s government named an ally of Prime Minister Narendra Modi as the country’s new central bank chief, a day after his predecessor quit following a dispute about government interference.

Shaktikanta Das has been appointed governor of the Reserve Bank of India (RBI) for three years, a government statement said.

The 63-year- old is a former senior finance ministry official and a key figure in Modi’s controversial ‘demonetisation’ scheme of November 2016.

Das has worked with various government bodies and was part of the economic affairs ministry when Modi announced his controversial cash ban that scrapped 86 percent of notes overnight.

“The government has hired an insider who will be sympathetic to government concerns and not hold diverging opinions,” independent economist Ashutosh Datar told AFP.

“This is an extremely disappointing choice and is the final straw in chipping away at the RBI’s integrity and freedom to set rates and take policy decisions,” he added.

Patel stood down as governor on Monday evening following months of tensions with Modi’s government over interference in policy that experts say raises fears about its independence.

Patel cited ‘ personal reasons’ for his decision but analysts and media reports have said he was annoyed by New Delhi’s repeated efforts to impose its influence.

Analysts say Patel’s departure, extremely rare for a central banker before the end of his term, is evidence that the RBI’s autonomy is under threat.

The Indian rupee sank more than one percent against the dollar Monday, with speculation swirling that an RBI intervention kept it from falling further.

“Das is a career bureaucrat and sympathetic towards the government,” Sujan Hajra, an economist at Anand Rathi securities told AFP.

“It may help the government and the RBI ensure better coordination but will raise questions about the latter’s integrity,” he added.

Patel’s resignation comes after his deputy, Viral Acharya, warned the government in a strongly worded speech in October that undermining the bank’s independence could be “potentially catastrophic”.

Indian business dailies reported in October and November that the government had invoked neverbefore-used powers to send at least three letters to Patel seeking to direct policy. — Reuters