Reserve Bank of India (RBI) deputy governor Urjit Patel and former deputy governor Rakesh Mohan are among the frontrunners to succeed incumbent governor Raghuram Rajan when his three-year term ends on September 4, an official source said, reports fe Bureau in New Delhi. Other names being considered include another former deputy governor of the central bank, Subir Gokarn (now an executive director at the International Monetary Fund), economic affairs secretary Shaktikanta Das and chief economic adviser in the finance ministry Arvind Subramanian, another person said. Although some reports suggested State Bank of India chief Arundhati Bhattacharya was also in the race, this could not be confirmed.
The next RBI governor will be selected by Prime Minister Narendra Modi in consultation with finance minister Arun Jaitley not later than July, the first source said. He, however, dismissed reports that a search panel headed by the Cabinet secretary will shortlist candidates for the post. “The selection process has already started. One person’s name will be finalised for approval of the PM,” he said.
Raghuram Rajan’s decision on Saturday to not seek a second term was not completely unanticipated in government circles, especially after BJP MP Subramanian Swamy launched broadsides at him. The rupee fell to a near one-month low on Monday after Rajan announced he would quit when his term ends. Stocks staged a smart recovery to end higher after the government announced sweeping reforms to rules on foreign direct investment, including opening up of its key defence and aviation sectors. The BSE index ended up 0.9% while the broader NSE index closed 0.84% higher.
Rajan’s exit is with an unfinished agenda: He had set in motion a cleaning-up of bank balance sheets and overseen the adoption of a new monetary policy framework by the government and central bank, with price stability as the primary objective.
Like Rajan, who worked previously as chief economist at IMF, most of the names doing the rounds for his successor — Patel, Mohan, Gokarn and Subramanian — served the fund at one time or the other.
Patel, who authored the RBI’s recommendation on setting up of an MPC for setting interest rates, has been a deputy governor of the RBI since January 7, 2013. He is in charge of monetary policy, economic policy research, statistics and information management, deposit insurance, etc. Besides the IMF, Patel worked in government also in the past.
Mohan, who has worked as RBI deputy governor in two terms for about six years (his second term ended in June 2009), was executive director at the IMF representing India, Sri Lanka, Bangladesh and Bhutan for three years up to November 2015. Mohan was also secretary at the department of economic affairs in the finance ministry. Gokarn replaced Mohan in the IMF, where he is currently posted. Prior to that, Gokarn had also replaced Mohan at the RBI in 2009 for a three-year term.