It is surprising that a man armed with knowledge of History, so much to gain a Masters in the subject, offers tremendously to the subjects of Finance and Economy. Not to the creation of finance, but to an entity called the Reserve Bank of India that majorly governs Banks and NBFCs.
Meet Shaktikanta Das, the Reserve Bank's 25th Governor. The 61 year old Das holds a Master's Degree from St. Stephen's College, New Delhi.
A three paragraph introductory letter which is slightly bigger than the note on Governor Urjit Patel's shock resignation says Shaktikanta Das' career spans a whopping 38 years, serving Central and State Governments in the areas of Finance, Taxation, Industries, Infrastructure, etc.
"During his long tenure in the Ministry of Finance, Government of India, he was directly associated with the preparation of as many as 8 Union Budgets. Shri Das has also served as India’s Alternate Governor in the World Bank, Asian Development Bank (ADB), New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB). He has represented India in international fora like the IMF, G20, BRICS, SAARC, etc," adds the RBI note.
For the uninitiated Mr. Das is quite different. At least from his past two predecessors. He's no Rockstar from Finance Ki Dunia like Raghuram Rajan, but loves his Twitter. So much so that he lashes upon Amazon, the e-commerce firm, for selling foot-wear colored like the Indian flag on its Canadian website. Amazon faced internet ire and soon pulled off the product. And unlike Urjit Patel who was absent from public appearances in the months post demonetisation, Das was almost everywhere. In fact, Das as the Secretary of Department of Economic Affairs was 'THE' bureaucrat who held press conferences.
Also, for the uninitiated, Das speaks fluent Tamil [Head to Youtube, type Shaktikanta Das to watch and hear him speak Tamil]. Although Das hails from Odia, he may have learnt Tamil during his stay in Tamil Nadu as a bureaucrat.
Das, who has been entrusted with the fresh task as the Reserve Bank's 25th Governor has already moved from North Street, Finance Ministry (New Delhi) to Mint Street (Mumbai). And it is his defence of the government's demonetisation that is viewed as a trademark of his non-confrontist approach in a 38 year old unblemished career.
His association with the Finance ministry in various ranks is expected to bring some respite to the ongoing RBI-Centre duel. Das joined the Finance Ministry as its joint secretary in 2008. During this period, P Chidambaram was the Finance Minister. Das also served the ministry during Pranab Mukherjee's term as the Finance Minister between 2009-12. In fact, Governor Das [As on 12th December 2018] is reported as part of the Finance Ministry team that drafted the budget-announcements between 2008-12.
In December 2013, he was promoted to Secretary, Department of Chemicals and Fertilizers. This posting lasted for a short time, with a call soon [mid-2014] from the ministry of finance asking him to join as revenue secretary. His move to the economic affairs department occurred in September 2015. He was in charge of this department on November 8, 2016, the day of demonetisation, and soon became the only bureaucrat between the public and the Finance ministry.
Das who fielded questions from the media and opposition is reported as an individual who maintained a calm composure during the post-demonetisation days. "It is not relevant who speaks. I am speaking on behalf of the government, I am not speaking here in my individual capacity. So, therefore, it is irrelevant whether I am speaking or somebody else is speaking,” Das had remarked back then.
Das during the days of demonetisation had referred to the Government's implementation as causing a "transient impact". "It has stayed afloat. Not only stayed afloat, but also doing well. Our commitment is to push growth momentum," he had said during November 2016 while adding that the economy would grow upwards of 7%.
Shaktikanta Das at a Finance Ministry meeting. Second from Right. Image Courtesy: Press Information Bureau
In an interview with Hindu Business Line, he answers a question on lending rates. He is quoted as saying, "As far as banks and surplus liquidity is concerned, I think there is an expectation that banks will reduce their lending rates as they also have low-cost deposits."
Das may be referred to as holding a dovish stance considering his reply on a question on policy rates and what to do with idle cash. In the same story that appears on Hindu, he says, "They have to lend, else what will they do with the idle cash? Last year, as a temporary measure, we had raised the market stabilisation scheme limit to ₹6 lakh crore,"
Shaktikanta Das was also the man who had announced the policy on allowing Rs 2.5 lakh for marriages and Rs 25,000 for farmers. Speaking at a press conference, News agency ANI quoted Das as saying, "The government has decided to permit farmers to draw up to Rs 25,000 per week against crop loans sanctioned and credited to their accounts."
Central govt employees up to group C can draw salary advance up to Rs 10,000 in cash that'll be adjusted against their Nov salaries: S Das pic.twitter.com/IKVydZkKI3— ANI (@ANI) November 17, 2016
In order to allow Das oversee the budget process in 2017, his tenure was extended by 3 months to May 31 2017. After he retired, the government appointed him as a G-20 sherpa and a member of 15th Finance commission. This rank is a Minister of State position in the India.
Although there are no reports of bias and complaints in Das's career, BJP MP Subramanian Swamy referred him in a statement. Swamy, in June 2016 remarked that a case was pending against Das for allegedly helping P Chidambaram "swallow" real estate in Mahabalipuram. Arun Jaitley, the then Finance Minister, however, came to the defence of Das and referred to Swamy's remarks as "an unfair and false attack on a disciplined civil servant".
BJP MP Subramanian Swamy: Shaktikanta Das being appointed as RBI Governor is wrong, he has worked closely in corrupt activities with P Chidambaram and even tried to save him in court cases. I don't know why this was done, I have written a letter to PM against this decision. pic.twitter.com/FuFEP9OAsu— ANI (@ANI) December 12, 2018
The Jaitley-Das bonhomie could continue and help improve working between the regulator and Finance ministry. In the past two months the RBI and Centre relationship have not been great, with reports claiming a breakdown in communication. The friction between the Banking regulator and the Centre arose over a multitude of factors- Using of Section 7 (a never used provision), sharing of the RBI's reserve corpus funds, formation of a payments regulator, and the RBI's Prompt-Corrective Action plan.
Finance Minister Arun Jaitley's comments on Shaktikanta Das' selection as the 25th governor"
FM Jaitley: Shaktikanta Das has been a very senior & experienced civil servant. He spent almost his entire career in the mgmt of finances& economic mgmt of the country, both when he was in the state govt of Tamil Nadu & when he was in the govt of India in the ministry of finance. pic.twitter.com/Ed3xn80a8F— ANI (@ANI) December 11, 2018
Although Das unlike his predecessor is not a trained economist neither a banker, his pro-government stance could ease working. His induction as the Governor has been welcomed by various industry associations such as FICCI and CII. In a media statement, FICCI said, The government has done well by appointing an economic administrator and manager of his eminence, stature and wide-ranging capabilities to guide RBI and Indian economy at this crucial juncture.
FICCI's President Rashesh Shah said, "It's a great choice. Mr Das has a 360-degree understanding of the financial issues facing the Indian economy and he also understands global issues due to his involvement with G20."
CII's President Rakesh Bharti Mittal, said, "The Government, in selecting an experienced economic expert, has avoided disruption and imparted huge confidence to investors and industry. We in industry, are confident that the liquidity squeeze in the banking and non-banking financial sector which is spilling over into the various segments of industry would be taken up with all urgency by Das."
A tweet from fellow bureaucrat Amitabh Kant:
Amitabh Kant, NITI Aayog CEO on Shaktikanta Das being appointed RBI Governor: He is a very sensible & forward-looking officer. He has been in the revenue & finance dept & handled budgets of GoI. He’ll add immense value to RBI as far as its independence & autonomy is concerned. pic.twitter.com/gUk9seXeQV— ANI (@ANI) December 12, 2018
Finance Secretary Ajay Narayan Jha speaking on Das' experience:
Finance Secretary Ajay Narayan Jha on Shaktikanta Das appointed as the RBI Governor: He has been Secretary of Economic Affairs. He has very wide experience of the state government as well as union government. My best wishes to him. pic.twitter.com/0JJRYrGxmJ— ANI (@ANI) December 11, 2018
Rajnish Kumar, the State Bank Chairman too welcomed Das's Governorship. "This will ensure continuity in monetary policy making and regulatory measures even as the global economy is passing through uncertain times. The financial markets will also significantly benefit from the appointment of newly appointed Governor given his rich prior experience in fiscal policies and trade. This will also ensure a convergence of domestic and external policies," he was quoted as saying in a media report.
Petroleum and Oil Minister Dharmendra Pradhan was reportedly proud that a fellow "Odia" had become the Governor. "His experience in economic affairs will push our economy towards higher & sustainable growth. I convey my best wishes for a successful tenure in his new role. Indeed, it is a proud moment for all Odias," Pradhan said in a tweet.
Shaktikanta Das, seated, extreme right.
Das is expected to take part in a crucial meeting on Friday [14th December]. Governor Patel's resignation had cast doubts on whether the meeting could be achieved. This meeting will involve discussion on reforms and governance.
"The December 14 meeting stands as of now. If RBI decides otherwise, we will get to know," Chief Economic Affairs Secretary Subhash Chandra Garg was quoted as saying.
Das who is viewed as pro-government is also expected to take a call on a wide-variety of policies- PAC, Cheaper Credit to industrialists, Banking Operations, Founder ownership in private banks, besides interest rates. There is also the aspect of upholding the Central Bank's Autonomy and saying a "Firm No" to the government.
Shaktikanta Das at an RBI board meet, seated (5th from Left) next to Governor Raghuram Rajan.
Will Das offer a "Firm No" in sharing the Reserve Bank's reserve corpus to government.
It will be perceptory to say that the 25th Governor will not offer a "Firm No" to the government since he is viewed as pro-government. Also, if one were to look at the Central Bank' s history, there have been many instances of bureaucrats turning into RBI's staunch advocates. Previous governors such as Bimal Jalan, YV Reddy, and D Subbarao were bureaucrats before joining as Governors. And, during their Governorship there were many instances that saw them acting as advocates of the Central Bank.
D Subbarao in an incident involving Governor YV Reddy and the then Finance Minister found Reddy receiving a call from the Finance Ministry.
Reddy says, 'No, no, no, no, no, yes, no, no, no', over the phone.
Reddy later disclosed to Subbarao that he was talking with the finance minister. He explained that the only 'yes' was in a reply to a question on whether Reddy was able to hear the Finance Minister.First Official statement of 25th RBI Governor:
Immediately after taking charge as the Reserve Bank's 25th Governor, Das remarked that he would uphold the "autonomy, integrity and credibility" of the RBI, newly-appointed Governor Shaktikanta Das said on Wednesday that the government is responsible for running the country and the central bank is also accountable.
Speaking on communication between the Centre and the RBI, he said, "There has to be a free, fair, objective and very frank discussion between the government and the RBI. And, I believe that all issues, however contentious, can be resolved through discussions."