RBI reshuffles portfolios of 3 deputy governors
Economist and public finance expert Urjit R Patel is set to be named as the Reserve Bank of India’s deputy governor in charge of monetary policy, replacing Subir Gokarn who left office on December 31 after a three-year term and a one-month extension. Sources said finance minister P Chidambaram has approved Patel’s name for the crucial post as recommended by a panel comprising governor D Subbarao and department of financial services secretary DK Mittal. A formal announcement is expected shortly.
Patel — now a consultant with Boston Consulting Group — is credited with over a decade’s experience in the Indian financial sector with a focus on funding private infrastructure projects.
For Patel, a PhD in economics from Yale University and an MPhil in economics from Oxford University, the assignment is a homecoming of sorts, as he had an earlier stint with the central bank as advisor. He also worked with the finance ministry for a while, making him the ideal choice for deputy governor who has to do a fine balancing act in monetary policy formulation.
Patel’s task in assisting the governor in monetary policy-making is, however, not going to be easy, with the government and the RBI not exactly on the same page on whether the time has come to cut interest rates.
The RBI held on to the repo rate (8%) last revised in April, at its October and December policy reviews, although a day before the October review, finance minister P Chidambaram had announced a new fiscal consolidation road map in an apparent bid to convince the central bank of the government’s seriousness on the fiscal front.
Of course, Subbarao has indicated an easing of policy in January-March quarter.
The norms allowed the deputy governor’s tenure being extended up to five years or till the incumbent turned 62, whichever is earlier. Sources said Subbarao had earlier favoured giving Gokarn an extension but the consensus was to appoint a new person. Besides Patel, others shortlisted for the post included World Bank’s South Asia chief economist Kalpana Kochhar.
Patel was a non-resident Senior Fellow at the Brookings Institution. He has also worked with the Infrastructure Development Finance Company and Reliance Industries. He was associated with government committees on pension reforms, direct taxes and integrated energy policy. He was also a member of the task force on direct taxes, CII’s financial services committee and the Competition