India appoints new central bank governor


The Indian government has named deputy governor Urjit Patel to head the Reserve Bank of India after the current central banker Raghuram Rajan steps down next month. The appointment points to policy continuity.

The appointment of Patel suggests the Indian government will maintain the monetary policy continuity of Rajan, who shocked markets in June when he said he would step down when his term ends in September to return to academia.

Patel currently runs the central bank’s monetary policy department, where he was instrumental in a switch to using consumer prices instead of  wholesale prices to measure inflation.

Patel is considered close to Rajan, a darling of the financial world for his policies that have tackled inflation and worked to cleaned up bad bank loans.

However, Rajan’s refusal to cut interest rates rapidly for fear of stoking inflation and his tough stance on cleaning up India’s troubled state-controlled banks, have been disliked by sections of India’s business and political elites – including some within Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP).

Rajan took over at the RBI in September 2013 when India faced a widening current account deficit, a falling rupee and sluggish economic growth. Inflation has since fallen from double-digit levels to around six percent.

Patel’s CV includes a stint at the International Monetary Fund, advising for the Boston Consulting Group, a decade in the financial sector and leading the Indian conglomerate Reliance Industries as president.

He holds an M. Phil in economics from Oxford University and a PhD in economics from Yale University.

cw/rc (AFP, Reuters)