While Patel has been officially appointed RBI Governor with effect from September 4, his first working day will be two days later because of 4th being Sunday followed by a holiday for Ganesh Chaturthi on 5th.
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Patel, 52, a Deputy Governor since January 2013, will take over as the 24th chief of India’s central bank on September 4.
The government nominees to the MPC have been shortlisted by a search-cum-selection committee headed by the cabinet secretary with the RBI governor and the economic affairs secretary and three experts in the field of economics or banking or finance or monetary policy as its members.
Ensuring undisruptive redemption of Dollars 20-25 billion, inflation control and bank cleanup will be the main challenges that will face Urjit Patel, who takes over as the 24th Governor of Reserve Bank early next month.
The new RBI governor was advisor (Energy and Infrastructure) with Boston Consulting Group before his appointment as the Deputy Governor at RBI in 2013.
Later, he worked for International Monetary Fund (IMF) desks in the US, India, Bahamas and Myanmar.
He holds an M. Phil in economics from Oxford University and a PhD in economics from Yale University.
The RBI should seek price stability, for which macro-prudence and macro-stability are more important than taming the consumer price index. This is because the Indian rupee is now the most stable among major emerging markets and global investors are eager for yield.
Ashutosh Datar, Chief Economist, IIFL Institutional Equities said the appointment showed a desire to continue on the same course.
He further said Raghuram Rajan’s exit will be a great loss as he is an economist of worldwide fame; perhaps Patel will make it up.
“Broadly this is a message of continuity”.
“It’s a continuation of Mr. Rajan’s regime”, said Madhavi Arora, economist at Kotak Mahindra Bank Ltd.
The next monetary policy review is on October 4. “We are looking for great continuity and that provides great comfort”, he said.
Prime Minister Narendra Modi’s government this month formally agreed to adopt Rajan’s inflation target of 2 to 6 percent in the medium term.
The BJP lawmaker Subramanian Swamy has called 53-year-old Rajan “mentally not fully Indian” and told him to “go back to Chicago” where he used to be a finance professor. It needs to be seen whether Patel will withstand the pressure to cut rates to spur growth while ensuring that government sticks to their fiscal deficit target.
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To second-guess what Patel’s priorities may be, I relied on research he published earlier in the year.
