Stating that the job of the RBI governor is not just monetary policy, Das said the central bank head is also the regulator of banks and NBFCs.
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“He has to work freely because the RBI Governor has to work as autonomous body and has to work independently, that is how we have to take the country forward”. He will replace the present RBI Governor Dr. Raghuram Rajan. Dr Patel, who is now serving as a deputy governor of RBI under Rajan, will take on some of the country’s biggest financial challenges once he assumes office.
A notification was issued by the government on August 6 on monetary policy.
His tweets led to his followers proclaiming that he was backing Patel’s appointment. “So, it would be reasonable to expect that there would a continuity”, he said.
Rajan’s deputy is likely to at least listen to arguments in favor of lower interest rates from some in government, but expectations of speedy cuts are unlikely to bear fruit.
As such traders expect Patel to keep the repo rate on hold at the RBI’s next policy review on October 4 after inflation accelerated to 6.07 percent in July, above the RBI’s near-term target of 5 percent.
“The shift to inflation targeting at the beginning of previous year has contributed to enhance the credibility and transparency of India’s monetary policy”, she said.
To add to it, he also has experience of working with International Monetary Fund between 1990 and 1995 where he covered the US, India, Bahamas and Myanmar desks.
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. Under the agreement with the government, the RBI is committed to anchoring retail inflation at 4% (plus or minus 2%) and has set itself a target of 5% by next March as part of a glide path to achieving the median mark.
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.
The appointment has ended weeks of speculation over who will succeed Raghuram Rajan. 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.
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As per the norms for MPC, each member shall have one vote and in case of a tie, the RBI Governor shall have a casting vote.
