Urjit Patel named new RBI Governor

The appointment of Urjit Patel, as Governor of the Reserve Bank of India (RBI), has naturally raised expectation among those who were critical of outgoing Governor Raghuram Rajan for not easing enough the monetary policy by cutting rates. Patel, now serving as the deputy governor of the RBI, will hold the post for three years, starting September 4.

NEW DELHI/MUMBAI, Aug 21 India’s incoming central bank governor Urjit Patel will aggressively fight inflation and continue a policy of a stable rupee and cash injections into the financial system, investors said, offering a comforting degree of continuity to his predecessor’s policies. Mr Patel himself is known as an “inflation warrior”, and brings with him valuable experience that includes stints with the corporate sector besides his work at the International Monetary Fund like his predecessor. “He also contribute to country’s economic progress”, Jaitley told TV news channel “Aaj Tak”.

Till the government appoints a replacement for Patel as the deputy governor, it will have to appoint one among the three DG – R Gandhi, SS Mundra and NS Vishwanathan – to oversee the critical monetary policy aspect in the interim.

Mr Modi backed that inflation target of 4 per cent, within a range of 2 to 6 per cent, in his annual Independence Day speech on Monday.

He was particularly picked for his expertise in inflation-control, which has become the main task of the central bank, ever since the government, under statute, set it a target of 4 percent, plus or minus two percentage points, based on consumer price index.

Indian media had speculated that Prime Minister Narendra Modi would name a monetary dove to replace Rajan. “He has a clear understanding of what is going on”, said RBI Deputy Governor S S Mundra.

Incidentally, it was a Saturday when Rajan surprised everyone on June 18 about his decision against a second term, while the announcement for Patel’s appointment also came on a Saturday.

Arundhati Bhattacharya, chairman of State Bank of India, said, “Appointment of Urjit Patel comes as a welcome move”. However, some within the RBI describe Patel as a moody man who avoids social interaction and huddles only with close aides.

Dr Patel also has corporate experience under this belt.

Sources said that Patel will continue the RBI’s fight against inflation and keeping interest rates high, which, in the past, has not gone down well with certain sections of the industry and polity.

Meanwhile, the dollar drew positives early in the session on hopes that the US Federal Reserve might decide to hike rates.

A soft-spoken person of Gujarati origin who has kept a low profile throughout his term at RBI, Patel was first given a three year term as Deputy Governor and got an extension this January.