Shaktikanta Das appointed as the new Governor of RBI in the place vacated by Urjit Patel

Shaktikanta Das appointed as the new Governor of RBI in the place vacated by Urjit Patel

 

Shaktikanta Das, a former economic affairs secretary and a current member of the Finance Commission, has been named the new governor of the Reserve Bank of India (RBI). Urjit Patel resigned as RBI governor yesterday on account of personal reasons though his exit was widely seen as an outcome of the rift between the RBI and the government.

As economic affairs secretary from 2015 to 2017, Das has worked closely with the central bank. At present, he is also the government’s representative at the Group of 20 summits. 

A 1980 batch Tamil Nadu batch IAS officer, Das took charge as as Union revenue secretary in June 2014. His was the first high-level bureaucratic rejig in the Finance Ministry after the Narendra Modi-led government took over, an indication of his being in the good books of the prime minister.

As the economic affairs secretary, Das was the key man behind the planning and execution of demonetisation drive. Most of the public statements on demonetisation had been made by him which led to the impression that the government was at the forefront of the drive instead of the RBI. 

In October 2015, Das was nominated to the Central Board of Directors of the RBI. This was to signal an easing of what had sometimes been a tense relationship. Earlier, the finance ministry had downgraded its representation on the central bank’s board to the level of additional secretary. Traditionally, the senior-most bureaucrat in the finance ministry’s department of economic affairs has been a member of the board. 

But, in an unprecedented move, the finance ministry had in June nominated additional secretary Ajay Tyagi to the board in place of then finance secretary Rajiv Mehrishi. This added to speculation about differences between the finance ministry and RBI that had broken out over a number of issues including interest rates, recommendations of the Financial Sector Legislative Reforms Commission, the new monetary policy framework and the creation of a monetary policy committee.

As the economic affairs secretary, Das was the key man behind the planning and execution of demonetisation drive. Most of the public statements on demonetisation had been made by him which led to the impression that the government was at the forefront of the drive instead of the RBI. 

In October 2015, Das was nominated to the Central Board of Directors of the RBI. This was to signal an easing of what had sometimes been a tense relationship. Earlier, the finance ministry had downgraded its representation on the central bank’s board to the level of additional secretary. Traditionally, the senior-most bureaucrat in the finance ministry’s department of economic affairs has been a member of the board.  But, in an unprecedented move, the finance ministry had in June nominated additional secretary Ajay Tyagi to the board in place of then finance secretary Rajiv Mehrishi. This added to speculation about differences between the finance ministry and RBI that had broken out over a number of issues including interest rates, recommendations of the Financial Sector Legislative Reforms Commission, the new monetary policy framework and the creation of a monetary policy committee. 

Clearly, Das is the man who has seen both the sides of economic governance, the government as well as the RBI. 

Das was also the brain behind rolling out of the Goods and Services Tax (GST). He was instrumental in pushing GST soon after the Modi government took charge. As revenue secretary, he worked closely with Finance Minister Jaitley and the empowered committee of state finance ministers to break the deadlock and draw up the draft legislation. 

Das was also responsible for Tamil Nadu’s successful SEZs and industrial policy. He withstood political pressure to allot government land to private IT companies in Tamil Nadu without a bidding process. 

As the new head of the RBI, Das will face the issues between the government and the Central bank that that have not been resolved fully. The RBI’s reserves and the role of the RBI board in the decision-making process will be two hot issues that would require clarity. 

 

 
 
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