Government likely to appoint an economist to succeed Raghuram Rajan as RBI Governor
NEW DELHI: The government is likely to appoint an economist to succeed Raghuram Rajan as governor of the Reserve Bank of India rather than a bureaucrat.
Former Reserve Bank deputy governors Rakesh Mohan and Subir Gokarn, and current deputy governor Urjit Patel are under consideration as candidates for the post. Others in the reckoning are World Bank Chief Economist Kaushik Basu and former chief economic adviser Ashok Lahiri.
“The government is more keen on appointing an economist as the RBI governor,” said a senior official aware of initial discussions. “Bureaucrats are not under active consideration.” Chief Economic Adviser Arvind Subramanian , too, could be a possible candidate, but as of now the thinking is that he should remain in the finance ministry.
The government feels appointing an economist will send a strong signal to the international community and address concerns over the RBI’s monetary policy independence.
There had been speculation that several bureaucrats were in the running for the post. A successor to Rajan is expected to be announced next month to end speculation and also give the person time to prepare for the new job. The decision will be made by Prime Minister Narendra Modi in consultation with Finance Minister Arun Jaitley.
The RBI governor’s role in setting interest rates is in any case set to get diluted with a monetary policy committee taking over the role. The six-member committee will have three members appointed by the government and three by the RBI. It will be headed by the RBI governor. Rajan had said earlier this month that he will be returning to academia once his term ends in September.
Mohan is an old RBI and policy hand, having served as deputy governor in two different stints. He also knows the government well from the inside, having been secretary at the department of economic affairs and chief economic adviser. He was India’s executive director at the International Monetary Fund (IMF) for a threeyear term beginning November 2012. Gokarn is executive director on the IMF board, having replaced Mohan. He was earlier chief Asia-Pacific economist at Standard and Poor’s. Basu is on leave from Cornell University where he is professor of economics. He was chief economic advisor to the previous United Progressive Alliance government.
Patel is responsible at the RBI for monetary policy and related issues. Lahiri is currently chairman of Bandhan Bank.
The immediate job of the new RBI governor would be to see through the bad-loan cleanup at state-run banks. The government had some differences with Rajan over the pace of monetary easing, but what possibly went against him, according to the official cited above, were his comments on non-economic issues as a public intellectual.
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