RBI deputy governor steps up to top job

Urjit Patel, currently deputy governor of the Reserve Bank of India (RBI), will take over as governor of the central bank next month in succession to Raghuram Rajan, who announced in June that he would not seek a second term in office.

Patel, formerly a Yale University economist, worked at the International Monetary Fund (IMF) in the early 1990s and is expected to maintain his predecessor’s efforts to lower inflation.

He was appointed deputy governor in 2013 and was the key official responsible for the central bank’s shift toward a monetary policy based more on consumer inflation. Patel headed the RBI panel that recommended using a target range of the consumer-price inflation rate. Previously the RBI used a range of indicators – including growth, employment, inflation and the exchange rate – which critics claimed had added to investors’ uncertainty.

Rajan, who took over as governor of the RBI at the same time, is widely credited with helping arrest the decline of the rupee (INR) against the dollar and reducing India’s inflation rate.

However, he was criticised by some politicians and business leaders for being too outspoken on issues other than monetary policy and for not doing enough to boost growth in Asia’s third-largest economy, according to senior government officials. Nonetheless, many were surprised when he announced in June that he would not seek a second term in office when his initial three-year term expires on September 4 and that he would resume his tenure at the University of Chicago.

Patel’s appointment is seen as representing continuity and a safe pair of hands, which will reassure international investors. He is also expected to be lower-key and more conventional than Rajan, who often stepped beyond his remit by urging tolerance among different religions or criticising the lavish lifestyle of indebted businessmen.

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