Civil servants at Mint Road

The rise of civil servants at the helm of the RBI is not a new trend

- A K BHATTACHARYA

Since its inception in 1935, the Reserve Bank of India (RBI) has had 25 governors who have overseen India's banking regulation and monetary policy formulation for close to 90 years. Of them, as many as 14 were civil servants, seven were professional economists, three were from the financial sector, and only one from the RBI cadre of officers. You may quibble over the names of a couple of the civil servants and argue that they were also trained economists. But the preponderance of members of the Indian civil service at the helm of the RBI is a fact that has often been ignored in recent debates over how governments of late have relied more on civil servants to head the central bank.

Indeed, the Jawaharlal Nehru government had appointed four RBI governors during its entire tenure of about 17 years and all of them were civil servants. To argue that Nehru chose civil servants because trained economists were not available to him would be puerile. Not to be left behind, the Indira Gandhi government too had showed its preference for civil servants by appointing three of them at the head of the central bank. Even the British rulers had plumped for two civil servants out of the three governors they appointed during the 12 years from 1935 to 1947. Interestingly, the only governments that did not appoint a civil servant as the RBI governor were those led by Morarji Desai, Indira Gandhi in her second stint, and P V Narasimha Rao.

Sanjay Malhotra, whose appointment as RBI governor was approved by the government on Monday, will be its 26th head and he will be the 15th civil servant to occupy this coveted position. For the Narendra Modi government, the balance, as far as the appointment of RBI governors is concerned, has now tilted in favour of civil servants. Of the three governors it has appointed since its formation in 2014, two have been civil servants and one an economist.