Sunday, August 21, 2016

Urjit Patel as RBI Governor

Choice of Urjit Patel as the Governor of RBI is apparently appropriate. He is like Raghuram Rajan in aversion for 'excessive' inflation. He prioritises price management over growth though he would not admit / claim it so bluntly. Businessmen who are looking or interest rate reduction will be disappointed in the short run.

Rajan put the fear of God into borrowers who tried to backtrack on repayment commitments. It will be interesting to see if Patel would resist pressure from business bigwigs. The Patel community of Gujarat had produced an RBI Governor even earlier in I.G.Patel. Urjit Patel was chosen as Deputy Governor of RBI by the UPA and hence he is politically non-controversial. His academic background is formidable having studied in LSE, Oxford and Yale. However, my sense is that (a hangover from Rajan) the Governor needs luck as much as academic credentials. We have to wait and watch if circumstances would be favourable to him.

His earlier association with the Reliance group as an employee is bound, sooner or later, to set some political tongues wagging.

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