Urjit Patel The New RBI Governor

India named deputy central bank Gov. Urjit Patel to replace outgoing Gov.

With RBI governor-designate Urjit Patel coming from the same school of thought as Dr Raghuram Rajan, he would have to do a fine balancing act of keeping inflation under control and boosting economic growth.

For starters, Patel will have to focus on the Monetary Policy Committee (MPC) that will determine interest rates to meet inflation target.

Urjit Patel, Reserve Bank of India’s deputy governor, was appointed to head the country’s central bank system with the hopes of continuing sweeping reforms.

Raghuram Rajan, a former International Monetary Fund chief economist, who shocked financial markets in June by announcing he would step down in September.

Patel was also a Consultant (1998-2001) to the Ministry of Finance, Department of Economic Affairs, New Delhi. Rajan’s last working day as the central banker is September 04.

“Patel’s appointment will be comforting”, Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co., which has $6.5 billion in assets, said in an interview from Pune.

Patel, whose experience includes a mix of stints with multilateral institutions, bureaucracy, central bank, global consultancies and even private companies, has previously served the International Monetary Fund (IMF) in the US, India, Bahamas and Myanmar.

So far as in his tenure at RBI, he has largely kept away from other fora of public speaking – something the incumbent Governor Rajan loved doing and earned flak for.

Rajan’s predecessor Duvvuri Subbarao in chats with television channels has called Rajan’s legacy “rich, vast and enduring”, particularly mentioning inflation targeting, the creation of the MPC and pushing for on-tap bank licences.

The Congress leader was apparently referring to Patel being born in Kenya and BJP MP Subramanian Swamy’s repeated digs at Rajan for retaining his U.S. green card despite becoming RBI Governor.

Mr Patel will also have to navigate India’s tricky political scene. There are a few reasons why Patel’s appointment is a right decision.

The new governor takes over at a time when inflation has risen above that range.

Less than three weeks are remaining for Rajan’s three year term at RBI to come to an end.

Industry body Federation of Indian Chambers of Commerce and Industry (Ficci) credited Patel with being the architect of the current monetary policy stance.