Bond prices fell on Monday as investors paused their recent liquidity-fuelled purchases of government debt to take stock of the appointment of Reserve Bank of India (RBI) Deputy Governor Urjit Patel as its next head.
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Patel has been holding charge of the monetary policy decisions of the central bank.
The long wait for RBI Governor Raghuram Rajan’s successor got over and the Finance Ministry on Saturday appointed Urjit Patel as the new governor of the central bank.
The RBI’s next monetary policy review is due on October 4. “His appointment signals continuity of policy intent, both on part of RBI and the Government”.
As per ET, the shortlist of names considered by the committee included the department of economic affairs secretary Shaktikanta Das, chief economic advisor Arvind Subramanian, former deputy governor Subir Gokarn, former World Bank chief economist Kaushik Basu and Dr Patel.
India has named a new top central banker. I believe that he will be able to contain inflation with Monetary Policy Committee to assist him.
The appointment has ended weeks of speculation over who will succeed Raghuram Rajan.
Back home, the Goods and Services Tax now being a reality, the impact of its rate on price inflation is the biggest challenge for the government, and must be so for the new RBI governor as well. As Chairman of the Urjit Patel committee, he advised moving to a consumer inflation target of 4 – 2 percent and towards positive real interest rates. PM Narendra Modi had a hard task of picking the right fit for the position, someone who could step into Rajan’s boots with the right mix of intellectual credentials and global acceptability. The fact that Patel is well versed with the functioning of the banking regulator of India, is likely to buoy market spirits.
In 2013, when he was offered to become the deputy governor of RBI, his recommendation letter was written by none other than the then Prime Minister Dr. Manmohan Singh.
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Rajan took the reins at the RBI in September 2013 at a time when India was struggling with a ballooning current account deficit, a plummeting currency and decade-low economic growth. He also served at the International Monetary Fund where he covered the US, India, Bahamas and Myanmar desks before joining RBI. Patel was appointed as a non-executive director on the board of Gujarat State Petroleum Corporation in 2005 by the then Gujarat chief minister Narendra Modi.
