“Choosing Patel suggests that the government supports or at least is content to continue with Rajan’s policies at the RBI, some of which Patel helped to develop and implement”, Mihir Sharma, a Bloomberg view columnist, wrote.
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“His appointment signals the continuity of policy intent, both on the part of the government and the RBI”, she further added.
Hailing Urjit Patel’s appointment as RBI Governor as “vote for continuity”, India Inc and experts are unanimous that he is an excellent choice for the top job at the central bank when the economy is passing through a crucial phase. (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.
Rajan, who has been credited with helping navigate the Indian economy through tough times, had in June surprised economists when he said he would return to academia and not seek a second term.
While Patel is described as the chief architect of the report on the monetary policy framework, it must be noted that the new framework also has a lot of imprint of the incumbent governor Raghuram Rajan, who believes that high inflation and high growth can not co-exist. “This is welcome and worldwide investors will receive this very positively as continuity in policy formulation assures consistency and predictability of the Central Bank’s monetary stance”. Three members of this committee will be from outside the RBI appointed by the government. The government has set a consumer inflation target of 4 per cent, plus or minus 2 per cent.
Its collateral benefits besides lower inflation will include stable currency and higher real interest rates, he had said. “A central bank governor doesn’t need to have a rock star status to be successful in reining in inflation or cleaning up the banking sector”, he said.
The chief of the RBI is typically chosen by the prime minister in consultation with the Finance Ministry, making Dr Patel the first governor to be chosen by Prime Minister Narendra Modi. Congratulating Patel, Finance Minister Arun Jaitley in a tweet said, “I’m sure he will successfully lead the Reserve Bank and contribute to India’s economic development”.
Mr Patel will also have to navigate India’s tricky political scene.
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Economists said that if an RBI insider such as Patel was nominated, the central bank’s independence, which has come under pressure in recent years, was likely to be preserved.
