Urjit Patel, new RBI Governor: Good decision PM Modi; seems Subramanian Swamy will approve too

PM Modi has done a fantastic job – both in terms of economy & politics – with the appointment of Urjit Patel as the new RBI Governor. It was perhaps the toughest decision to take at this time with outgoing governor Raghuram Rajan’s iconic status, not just locally, but also globally. Raghuram Rajan’s decision not to go for a second term came at a very critical time when the world was focused on Brexit. It was no surprise that people in India coined the expression Rexit – the exit of Raghuram Rajan as they saw his going an event as earth shattering as Britain leaving the European Union.

For now, it seems even Subramanian Swamy approves of this decision – some of his initial retweets and replies on micro-blogging site Twitter seem to suggest this. Politics was a critical element in this decision. While the reactions of Opposition are still awaited, having Swamy on its side on this move will surely help the govt have one less thing to worry about.

Analyst after analyst, and expert after expert expressed apprehension over who the next RBI governor would be. There was also much worry internationally, with many citing Raghuram Rajan’s international acclaim and his outstanding stint at the RBI at a very critical time for India and the rupee.

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There was much speculation over who Raghuram Rajan’s successor would be and also much debate. After much suspense and much dart-throwing at the possible names, the government has finally come out with Urjit Patel as the new RBI Governor. And, it has made a decision that will soothe frayed nerves of those worried about Rajan’s successor and shut the critics who were hoping the government would badly slip up on this.

No one can dispute the qualifications of Urjit Patel; he is an eminently qualified individual who has been holding a very important position at the Reserve Bank of India for the last four years. And, what will soothe nerves the most, is that he is seen as someone who was in agreement with what Raghuram Rajan was doing. Modi government has ensured continuity with this appointment of Urjit Patel, something that will be critical for debt, forex and equity markets in the months going ahead.

Also Read: Urjit Patel named new RBI governor; to take over from Raghuram Rajan

It remains to be seen though if he will take a drastically different position from Raghuram Rajan on interest rates and inflation targeting. The process of making that decision will also change, based on Urijit Patel’s own recommendation of moving to a monetary policy committee set-up, where a larger group of people will take a decision on interest rates and not just an individual.

PM Modi and FM Jaitley seem to have staved off a huge potential economic & political storm with this decision. And that can only be good news for India.