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The Twitter handle '@urjitpatel_' shot into limelight instantly after the government announced Patel as successor of Raghuram Rajan on his completion of three-year term on September 4. (Image Source: Express Photo)
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The topmost thing on Urjit Patel, 52, mind will be to chaperon the monetary policy. As the Governor, will he be more inclined to cut key rates than Rajan? Likely not, on current conditions. But things change. With the monetary policy committee to decide rates, it will be a challenge for Urjit as no precedents will be available to him. In fact, Patel was the head of a panel that recommended changes to monetary policy for the adoption of inflation-targeting as well as the establishment of a committee to set interest rates. Patel will have to beat out the implementation agenda where required. He will not have it easy to get things done the way he wants to. (Image Source: Express Photo)
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Immediately on his plate will be the appointment of the crucial monetary policy panel. Centre is expected to announce the names making up the six-member committee to decide on interest rates. Aside from the RBI Governor, which will be Urjit Patel, it will include two RBI officials, plus three government appointees. (Image Source: Reuters)
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Inflation will arguably occupy the most time and effort of the new RBI Governor Urjit Patel. Patel has supported the inflation targeting switch and will now have to do all the follow-up required to keep the data in synch with the projections. Centre's role here will be crucial to success, but it remains to be seen how strong the new Governor will be to try and keep the Indian economy within the tracks. Having said that, inflation has gone over RBI's comfort zone in July and in fact this has been the case for the the fourth consecutive month – RBI target is 4 (plus or minus 2) percent by March. The latest data shows that the wholesale price index (WPI) inflation has soared to a 2-year high at 3.55 per cent; consumer inflation too jumped to a 2-year high of 6.07 per cent in July. (Image Source: Reuters)
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Indian banks' non-performing assets (NPAs) are critically high and have threatened to get out of hand at times. Raghuram Rajan has been making efforts to clean up all the banks' bad loans mess in order to get them back in good health so that they can get into a position to support the investment drive that the government is desperately striving for to kickstart the economy and get it into double-digit growth territory. It will be Patel's job now to make sure the crisis ends fast. This job will entail a a lot of tough talking and an even more severe policy imposition before the banking segment is back at its best. At the moment even to get them to pass on the benefits of rate cuts by RBI on to the borrowers is impossible. This alone will surely be a handful for the new cbank chief. (Image Source: Reuters)
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And finally, with Raghuram Rajan facing a lot of opposition from various leaders in the Bharatiya Janata Party (BJP), particularly Subramanian Swamy, Urjit Patel, who has previous links with the International Monetary Fund (IMF) and is also educated abroad, will have to tread carefully as far as the political world is concerned. Unlike, Rajan, however, Patel is not expected to comment on current political and social happenings in India and the world. However, Rajan faced flak for not cutting key rates the most, will the same happen to Patel? (Image Source: Express Photo)
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