Economist and public finance expert Urjit R Patel is set to be named as the Reserve Bank of Indias 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 Patels 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 decades 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.
Patels 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 governments seriousness on the fiscal front.
Of course, Subbarao has indicated an easing of policy in January-March quarter.
The norms allowed the deputy governors 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 Banks 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, CIIs financial services committee and the Competition Commission advisory committee. Patel has also served as a member of the board at the Multi Commodity Exchange (MCX) of India.
Initially, Gokarn (who was earlier S&Ps Asia-Pacific chief economist) was appointed as deputy governor for three years in November 2009. On November 21, 2012, the finance ministry re-appointed him till December 31 or till a regular appointment was made or till further orders whichever is earlier.
There are four deputy governors in the RBI. While two Anand Sinha and H R Khan were promoted from within RBI, the other two KC Chakrabarty and Gokarn were from the outside.
Meanwhile, pending the appointment of a new deputy governor in place of Gokarn, the RBI on Tuesday reshuffled the portfolios of three existing deputy governors. According to a release, Gokarns portfolio has been distributed among the three deputy governors. Key departments like the department of economic and policy research, department of statistics and information management and monetary policy department will now directly report to governor D Subbarao.
HR Khan will oversee financial markets department while KC Chakrabarty will take additional charge of DICGC, Rajbhasha department and the Right to Information division, the release said.
Deputy governor Anand Sinha will take additional charge of the departments of communication and risk monitoring.
As deputy governor, Gokarn supervised the crucial departments of monetary policy, economic analysis and policy, statistics and information management, communication and deposit insurance and the Credit Guarantee Corporation.