Raghuram Rajan’s Successor Likely to Be Announced This Week

Niti Aayog Chairman Arvind Panagariya is most likely to be named as the next governor of the Reserve Bank of India.

Indian government bonds rallied, with the benchmark 10-year yields at over three-year lows, as investors bet on benign inflation data later in the day and awaited a government announcement on the next RBI governor. At least two names – Panagariya and SBI chairperson Arundhati Bhattacharya – were proposed by a search committee headed by Cabinet Secretary P K Sinha, said the sources. 64-year- old Panagariya is also India’s key negotiator at G20 summit. On January 5, 2015, he was appointed as Vice-Chairman of NITI Aayog or National Institution for Transforming India Aayog.

Several names, including Vijay Kelkar, Rakesh Mohan, Ashok Lahiri, Urjit Patel, Subir Gokarn and Ashok Chawla, are doing the rounds for the RBI Governor’s post.

Panagariya was the Chief Economist of the Asian Development Bank, and a Professor of Economics and Co-director Center for International Economics, University of Maryland at College Park. He was also a chief economist at the International Monetary Fund. It is widely expected that the new governor will become an Officer on Special Duty (OSD) in the central bank to allow for a transition period. While discussing the many ifs and buts regarding the tenure of Mr. Rajan, one should also look into the statement of the Indian Finance Minister Arun Jaitley who has stated that the government is respecting Mr. Rajan’s decision.

The current RBI Governor Raghuram Rajan took markets by surprise in June, when he announced his decision to not to seek a second term.