As Urjit Patel Exits The RBI, Can The Central Bank Maintain Its Autonomy!

As Urjit Patel moves out of the RBI and Shaktikanta Das moves in, it’ll be of interest to see how the central bank upholds its autonomy even as it liaises with the government on fixes for a slowing, shaky economy

- Shweta Punj & M.G. Arun

With a thick mop of hair, an inscrutable expression and quiet demeanour, he had the mien of a professor rather than one of India’s most powerful officials. He was someone who packed his arguments with ruthless data and academic literature in the most professorial and mild-mannered fashion. Urjit Patel, 55, now former Reserve Bank of India (RBI) governor, was no power broker or hotshot as RBI chief. The expectation was that Patel would be non-confrontational and agreeable with the economics of the government. In the end, the quiet banker proved to be a surprise to the powers that be.

In contrast, Shaktikanta Das, 63, who has taken over as the new RBI governor, is known to be more accessible and responsive, and was the government’s public face during the demonetisation days, in his capacity as secretary, economic affairs. A day after he took office at the RBI headquarters in Mumbai, Das even held a press briefing, battling questions with considerable ease, giving an impression of openness and informality.

Das will have to put all his skills to use as he traverses a terrain that has been marred by a public spat between the central bank and the government, on a variety of topics, including its autonomy and governance structure, the level of cash reserve it should hold for itself, the strict Prompt Corrective Action (PCA) framework for weak state-owned banks, injecting more money into a system scarred by the Infrastructure Leasing & Financial Services imbroglio, all the while balancing inflation-targeting with growth.

A bumpy start