December 12, 2018:
On Monday, Former economic affairs secretary Shaktikanta Das was named as the 25th governor of the Reserve Bank of India to succeed Urjit Patel, who quit abruptly amid a bitter dispute over the regulator’s autonomy.
The appointment means that the central bank will once again be headed by a former Indian Administrative Services (IAS) officer. Patel, who had said he was resigning for personal reasons, and his predecessor Raghuram Rajan are economists.
Government has began the selection process soon after Patel’s resignation. It was expedited as the government didn’t want the post to remain vacant at a crucial juncture. The appointment will be for three years. He is likely to join at the earliest.
Das, 63, a veteran Tamil Nadu cadre officer, will first have to work on normalizing the relationship b/w the RBI and the Govt. that had turned frosty in the past few months as the two differed on many issues.
Das had been instrumental in establishing the monetary policy committee (MPC) and the switchover to an inflationtargeting regime, among other things.
Now that he’s moving to the regulatory side, Das may even have to resist some of the ideas he supported when in Govt.
“This will ensure continuity in monetary policymaking and regulatory measures even as the global economy is passing through uncertain times.” said Rajnish Kumar, chairman, State Bank of India.
He added, “The financial markets will also significantly benefit given his rich prior experience in fiscal policies and trade. This will also ensure a convergence of domestic and external policies.”
Welcoming the appointment, Niti Aayog CEO Amitabh Kant said in a tweet, “Extremely seasoned & matured official with immense experience of finance. He is a brilliant team leader, a great consensus builder & highly communicative. Will focus on India’s economic growth while ensuring RBI’s autonomy.”
Indian industry welcomed the appointment and hoped Das would address liquidity concerns.
“We in industry, are confident that the liquidity squeeze in the banking and non-banking financial sector, which is spilling over into the various segments of industry, would be taken up with all urgency by Das and there would be seamless flow of credit to industry and trade,” said Confederation of Indian Industry president Rakesh Bharti Mittal.
Federation of Indian Chambers of Commerce & Industry (Ficci) president Rashesh Shah focused on the need to bring down real interest rates, improve liquidity and promote growth and employment.
He said, “Improving credit flow to the real economy, especially in sectors like MSME and housing is critical at this juncture.”
On Tuesday, the govt., which suffered a setback in state election results, will be keen to get cracking on programmes to accelerate economic activity and generate employment ahead of national elections next year.
It has been seeking a special liquidity window for non-banking finance companies (NBFCs) that lend to small and medium enterprises (SMEs) and create jobs in smaller towns.
On Monday, FM Arun Jaitley told in an interview that while overall liquidity may have improved, some sectors still face issues
Das last served as secretary of the department of economic affairs, which means he has invaluable insight into what the government requires. In this role, he was the frontline government spokesman following demonetization. Also, his interactions with the central bank during those years gives him firsthand knowledge of its functioning.