Between 2000 and 2004, Patel had worked with several Central and State government committees such as the Task Force on Direct Taxes, the Ministry of Finance, and the Secretariat for the Prime Minister’s Task Force on Infrastructure.
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Post much speculation and commotion, eminent economist, consultant and banker Urjit Patel has been appointed as the new RBI Governor, on Saturday.
Deputy Governor Urjit Patel, who will take charge as the 24th Governor of the Reserve Bank of India (RBI) was congratulated by Finance Minister Arun Jaitley and other members of the banking sector and India Inc for his new innings as incumbent Raghuram Rajan demits office in the first week of September. “There could be some knee-jerk sell-off in bond markets as the euphoria of extensive monetary easing moderates”, Samiran Chakraborty, chief economist Citi India, said, commenting on the appointment of the new governor.
Welcoming the appointment, SBI Chairman Arundhati Bhattacharya said, “Patel has been at the helm of institutionalising the inflation targeting regime in the monetary policy framework”. He is famously being named as the “inflation warrior”.
Fitch director Thomas Rookmaaker, the director of its Asia-Pacific sovereign ratings group, said Mr Patel would need to continue the fight against high inflation and shoring up weak balance sheets at lenders.
The government accepted those recommendations and recently gave it a legal backing too.
The appointment of Patel as RBI chief may also help to speed up the creation of a monetary policy committee, Shah noted. He had even been critical of the previous Governor D. Subbarao’s policy on interest rates that led to prices rising at double digits.
Later, he was on deputation (1996-1997) from the International Monetary Fund to the Reserve Bank of India, before becoming a Consultant (1998- 2001) to the Ministry of Finance.
That may require a consensus-builder, in the mould of central banks in developed markets such as the US Federal Reserve. Patel’s appointment comes at a time when inflation has breached the 6 per cent top range set by the Government. If Patel can not slow down these price rises, it will cast a pall on the formal inflation-targeting role that he helped convince the government to enshrine for the bank. It will be made up of himself, two other RBI officials and three members appointed by the government.
Still, analysts, say they still see scope for an interest rate cut at the end of this year or early in 2017 should food prices moderate in coming months as monsoon rains have been above average.
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Rajan took the reins at the RBI in September 2013 at a time when India’s economy was struggling with a ballooning current account deficit, a plummeting currency and decade-low economic growth.
