Ending months of speculation, Urjit Patel, 53, a deputy governor at the Reserve Bank of India (RBI), was, on Saturday (20th August, 2016), named as the next chief of India's central bank to succeed the outspoken Raghuram Rajan, whose tenure was marked by tough measures to control inflation and headline-making statements.
He will be among the very few with a corporate background to become the RBI Governor, and the eighth Deputy Governor to be made Governor at the RBI. He has been the sixth RBI Governor with an experience at International Monetary Fund (IMF). Importantly, the top post at the Mint Street has been previously held by mostly career bureaucrats or economists at academic institutions.
Mr. Urjit Patel will be starting his tenure from September 4 as announced by the govt. He will be the 24th RBI governor, whose tenure will continue for three years.
Mr. Patel has to face the challenge of overtaking the RBI when it is going through several reforms. He will be expected to keep prices stable and ensure credit flow to companies and individuals. The RBI and the government have set a new retail inflation target of 4% for the next five years with an upper tolerance level of 6% and lower limit of 2%.
His predecessor Mr. Rajan was appreciated by the international business community for the tough stands, as he took under his term; he has been largely accredited to keep the value of rupee steady even against the abrupt economy of the world. However, he was criticized by politicians and few business leaders for not being able to pace up the economy as expected. Rajan also went on to earn a reputation of being an outspoken critic on various economic and even non-economic issues, and was under attack in recent months from some quarters including Bharatiya Janata Party (BJP) MP Subramanian Swamy for what they termed as his priority on inflation control at the cost of growth.
The new RBI Governor is expected to keep the same stance as his predecessor and keep the economy stable while increasing the reforms to tick off the bad debt. India is considered as the fastest growing economy, with an accelerated growth of 7.6% in the fiscal year ended March, 2016. RBI’s deadline to clear bad loans by March 2017 is also around the corner, this will be the biggest challenge for the new RBI chief. The RBI estimates bad loans in the system would likely reach 8.5% of total loans next year, up from 7.6% at March, 2016.
Urjit Patel was born in Gujarat and obtained his Bachelor's in Economics from the London School of Economics and later received his doctorate in Economics from Yale University. He has been serving as Deputy Governor of RBI since January 2013.