Patel, deputy governor of the Reserve Bank of India since 2013, demonstrated intellectual heft in overseeing landmark changes to the 81-year old institution, including switching to inflation-targeting and establishing a monetary policy panel to set interest rates.
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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.
But on a broader view, Patel is seen as offering the closest feel to a second term by Raghuram Rajan, who unexpectedly announced in June he’s quitting as governor.
A committee headed by Patel had suggested the path to get inflation down to 4 per cent in the medium term and a glide path to achieve it. He will start his three-year term on September 4.
Patel will be the first governor to oversee interest rate decisions by a monetary policy committee (MPC), a six-member panel chaired by the RBI governor to decide on interest rates.
“(Patel) is extremely sensitive and pragmatic about not upsetting the government”, said another senior RBI official who works with him.
Patel, according to a Nomura note, is considered a “hawk” on his monetary policy stance and his appointment as the new governor assures continuity in monetary policy.
A version of this article appears in print on August 21, 2016 of The Himalayan Times. Patel, a graduate from Yale and Oxford universities, had earlier worked with the International Monetary Fund, the Boston Consulting Group, Reliance Industries and the Infrastructure Development Finance Corp.
Minister of State for Finance Santosh Kumar Gangwar hoped that Patel will do well as the RBI governor. When the rupee had a freefall due to “taper tantrums” in the summer of 2013, plummeting to lifetime low of 67.85, India mobilised Dollars 26 billion through foreign currency non-resident bank account (FCNR-B) deposits by offering a special swap window for banks.
Perhaps Patel’s greatest asset is that while he shares many of Rajan’s policy goals and has the right skills for the job, he is likely to be low-key and less flamboyant than his predecessor, therefore less likely to rub the government the wrong way.
Patel was also a Consultant (1998-2001) to the Ministry of Finance, Department of Economic Affairs, New Delhi. “Urjit Patel’s appointment provides continuity to the monetary policy-making, especially around inflation targeting”, said Nilesh Shah, managing director of Kotak Mahindra Mutual Fund. Before adopting Mr. Patel’s recommendations, the RBI used many different indicators-including growth, employment, inflation and the exchange rate-which critics of that approach said had added to investors’ uncertainty. Members of the committee described him as a true professional.
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Outgoing governor Raghuram Rajan was one of the world’s most well-known central bankers.
