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  Business   Raghuram Rajan’s ‘inflation warrior’ is new RBI governor

Raghuram Rajan’s ‘inflation warrior’ is new RBI governor

AGE CORRESPONDENT
Published : Aug 21, 2016, 5:24 am IST
Updated : Aug 21, 2016, 5:24 am IST

With just a fortnight left for Raghuram Rajan to demit office as governor of Reserve Bank of India (RBI), the government on Saturday chose his “inflation warrior” Urjit Patel to succeed him as the hea

Urjit Patel (Photo: PTI)
 Urjit Patel (Photo: PTI)

With just a fortnight left for Raghuram Rajan to demit office as governor of Reserve Bank of India (RBI), the government on Saturday chose his “inflation warrior” Urjit Patel to succeed him as the head of the central bank. Mr Patel will take charge as RBI governor on September 4.

Mr Patel’s selection as 24th RBI governor ends two months of speculations on who would succeed Mr Rajan after he had announced his decision to return to academics on June 18 this year, a step that had taken everyone by surprise.

Considering his experience with RBI, Mr Patel was a front-runner for the coveted post for which the names of State Bank of India (SBI) chairperson Arundhati Bhattacharya, chief economic advisor Arvind Subramanian and even Niti Aayog’s vice-chairman Arvind Panagariya were being speculated upon.

Ultimately, the government decided to maintain “continuity” by choosing Mr Rajan’s “go to man”. This could be gauged from the reaction of another fellow deputy governor of the RBI, S.S. Mundra, who said that Mr Patel will bring “great continuity” at the central bank.

Describing him as “a man of clear opinion who may bring some changes”, Mr Mundra said, “We all are very happy. Being a colleague, he brings great continuity and familiarity. He has a clear understanding of what is going on.”

Mr Patel’s selection comes against the backdrop of efforts by the Centre and the RBI to contain inflation at the minimum levels possible and it is here that his well-earned sobriquet of “inflation warrior” may come in handy.

Under the independent monetary policy committee, which is being set up, the government will set an inflation target for the RBI and the governor will be made answerable to Parliament if he fails to contain inflation within target.

Mr Patel, who joined the RBI as deputy governor on January 11, 2013, was given a second term in January this year after his three-year term expired.

That he enjoyed the confidence of Mr Rajan reflected in him heading the RBI panel to draft the monetary policy report, which became the basis of the ongoing reforms at the apex bank.

The Patel committee report also formed the basis of the monetary policy committee, which takes away a lot of powers of RBI and the governor, as also move to create a public debt management agency.

Prior to his appointment as the deputy governor, Mr Patel was Advisor (energy & infrastructure), Boston Consulting Group. Mr Patel, who did his Ph.D. (Economics) from Yale University, and M. Phil from Oxford (1986), was with the International Monetary Fund (IMF) between 1990 and 1995, where he worked on the US, India, Bahamas and Myanmar desks.

He was on deputation (1996-1997) from the IMF to the RBI and provided advice on development of the debt market, banking sector reforms, pension fund reforms, real exchange rate targeting and evolution of the foreign exchange market.

Mr Patel was also a consultant (1998-2001) to the Union ministry of finance’s department of economic affairs.

Location: India, Delhi, New Delhi