Shaktikanta Das replaces Urjit Patel as the new RBI governor
The government appointed Shaktikanta Das as the new governor of the Reserve Bank of India for three years, making him the 25th RBI chief. The decision was made 24 hours after Urjit Patel’s unforeseen resignation. The swift decision is a mark of the government’s resolve to combat uncertainty.
Das was born on February 25, 1957. He served as a Tamil Nadu cadre IAS officer in 1980. He was closely associated with the central bank as he served as an economic affairs secretary from 2015 to 2017. On December 11, he resigned as a member of the Finance Commission of India and is expected to take up his new role within a day or two.
Prime Minister Narendra Modi primarily intended Das to head up the revenue department at the Finance Ministry. As revenue secretary, he worked diligently on GST implementation and obtaining information on overseas black money. Later on, he was transferred to economic affairs, where he emerged as a strong supporter of demonetization in 2016 despite the RBI’s silence on the revolutionary decision. He was a strong advocate of the demonetization drive as he believed it would help curb unaccounted wealth in the economy, exercise control over counterfeit money and propel digital payments. In his capacity as economic affairs secretary, he drafted the Insolvency Code, amended the RBI Act to set up MPC and suggested FIPB abolition.
Shaktikanta Das will assume his role as RBI chief at a time when the relations between the government and the central bank are strained. The rift between them is on account of a number of reasons. Chief amongst these are the issues pertaining to governance structure of the RBI and the size of its balance sheet.
His appointment comes just in time for the upcoming board meeting on December 14. In the meeting, he will tackle issue concerning the economic affairs secretary and the necessary government reforms that will award the central board a bigger role in the RBI’s decision-making. A more immediate concern that Das will have to address is the liquidity concerns and stringent regulations faced by banks and NBFCs.
The previous governors of the RBI and other prominent members of the government have expressed their confidence in Das’s abilities to live up to expectations. By selecting an experienced economic expert, the Government has eluded disruption and reestablished confidence in the minds of investors and the industry at large.