Noted economist Urjit Patel will succeed Subir Gokarn as the next deputy governor of the Reserve Bank of India (RBI).
Patel, currently serving as an advisor with the Boston Consulting Group, has been chosen over International Monetary Fund (IMF) economist Kalpana Kochhar and Gokarn.
“Urjit Patel’s name has been finalised,” Department of Financial Services Secretary D K Mittal said on Wednesday.
Gokarn’ three-year term at RBI came to an end in November 2012, but the government gave him a one-month extension as it was yet to finalise the name of the next deputy governor. RBI was batting for a second term for Gokarn but the finance ministry was in favour of a new face.
A search panel, comprising RBI Governor D Subbarao and Mittal shortlisted names of Patel, Kochhar and Gokarn for the post.
Gokarn’s term finally came to an end on December 31, 2012. He was handling monetary policy.
According to an RBI statement on Tuesday, the monetary policy department would now be directly under Subbarao. Patel is likely to get the department when he takes charge at RBI.
The central bank has four deputy governors, of which two are selected from within. Among the remaining two, one is a commercial banker and the other is selected from the academic world. Deputy Governors Anand Sinha and H R Khan were promoted from within the ranks of RBI, while K C Chakrabarty is a commercial banker and Gokarn came from academics.
Patel has worked with the Reserve Bank of India earlier also. But this time, his role will be watched keenly, since he is joining as a deputy governor with the central bank and will look after monetary policy. These are the times when India Inc is looking at the reserve bank with an eye of hope for possible rate cuts.
Recently, Patel argued the RBI’s policy decisions were striking though its impact on the inflation rate is gradual and weaker than imagined. Patel thinks inflation is still high because many external factors must have offset the effect of monetary tightening of the central bank.
What does one make out of these views? Will he still focus on controlling inflation or change the stance to revive economic growth, which refuses to perk up? His actions will unfold later this month, when RBI comes out with its monetary review.