Urjit Patel named new RBI Governor

The top contenders for the RBI Governor post entail former Deputy Governor, Subir Gokarn who also met Finance Secretary, Shaktikanta Das.

The government promoted Urjit Patel, a deputy governor in charge of monetary policy at the Reserve Bank of India, to serve as its next governor for a three-year term, it said on Saturday.

With RBI governor-designate Urjit Patel coming from the same school of thought as Dr Raghuram Rajan, he would have to do a fine balancing act of keeping inflation under control and boosting economic growth.

Patel, a divorcee, was working with global consultancy major Boston Consultancy Group before he joined the RBI.

After obtaining his PhD, Dr. Patel joined the International Monetary Fund in 1990 worked on the USA, India, Bahamas and Myanmar desks at IMF till 1995.

Patel earned a doctorate degree in economics from Yale University, and holds a Master of Philosophy degree from Oxford.

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. The government had a bitter experience with Rajan on account of the governor's controversial comments on multiple issues including economic growth, intolerance issue and Make in India like schemes.

Urjit Patel named new RBI Governor

Ashutosh Datar, Chief Economist, IIFL Institutional Equities said the appointment showed a desire to continue on the same course. Patel is perceived to be a silent, friendly figure to Modi government and someone who would "keep his head down and work".

"Broadly this is a message of continuity".

Before that, economists as well as the central bank, focused only on wholesale price index-based inflation which is usually lower than the retail inflation. "At a time when RBI policy will be decided by a monetary policy committee, good communication skills are a necessity, which are lacking in him".

When he assumes charge as RBI Governor after Rajan demits office on September 4, Patel will have an inflation target of 4 per cent for March 2018, with a legroom of two percentage points on either side, which has been since notified by the government as per his own recommendations.

Subramanian Swamy, a famouly combative BJP official, had accused Rajan of "wrecking the economy" and being "mentally not fully Indian".

India opted for a continuation of the reforms Raghuram Rajan by selecting one of his deputies to take over the central bank.

The gross non-performing assets (GNPAs) of public sector banks increased Rs 2.16 lakh crore in 2013-14 to Rs 4.76 lakh crore in 2015-16.

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