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Urjit Patel: RBI's Inflation Warrior With Corporate Background

An economist by profession, Urjit Patel has his task cut out as the next RBI Governor -- to keep inflation under check without hurting growth -- but he will have to do that without being seen as an interest rate hawk, a title incumbent Raghuram Rajan had to carry unwillingly

Photo Credit : PTI


An economist by profession, Urjit Patel has his task cut out as the next RBI Governor -- to keep inflation under check without hurting growth -- but he will have to do that without being seen as an interest rate hawk, a title incumbent Raghuram Rajan had to carry unwillingly.

While Rajan's exit has been seen in many quarters as driven by his often candid views against various policies of the government, Patel's appointment as the 24th RBI Governor may end up ensuring continuity of the monetary policy of the current Governor.

Ironically, Rajan will be succeeded by a Deputy who went on to be known as his 'inflation warrior' for steering one of the biggest reforms carried out by the RBI in recent history by changing its face to an inflation-targetting central bank.

52-year-old Patel headed a committee on Monetary Policy Reforms that suggested a medium-term target on inflation and a glide-path to achieve the number. It was this report that led to the signing of an agreement on inflation targeting between the government and the central bank on February 20, 2015.

When he assumes charge as RBI Governor after Rajan demits office on September 4, Patel will have an inflation target of 4 per cent for March 2018, with a legroom of two percentage points on either side, which has been since notified by the government as per his own recommendations.

Patel, who was made Deputy Governor in January 2013, will also be among the few RBI Governors to have had a corporate background as most of the occupants of the top post at Mint Street were either career bureaucrats or economists with academic institutions.

A soft-spoken person of Gujarati origin who has kept a low profile throughout his term at RBI, Patel was first given a three year term as Deputy Governor and got an extension this January.

He has been heard rarely in the media and analyst conferences, barring a few media interviews, though his name has been doing the rounds as the next RBI Governor ever since Rajan made the surprise announcement in June that he would not opt for the second term.

Like Rajan, Patel also worked with International Monetary Fund before coming to India -- first at the Finance Ministry and then at RBI.

He also served as Advisor (Energy and Infrastructure) with the Boston Consulting Group.

Some of his previous assignments include, President (Business Development) AT Reliance Industries Limited, Executive Director and Member of the Management Committee at IDFC and Director at Gujarat State Petroleum Corporation Ltd.

Born on October 28, 1963, Patel is a PhD (Economics) from Yale University (1990) and M Phil from Oxford (1986). He has been a non resident Senior Fellow, The Brookings Institution since 2009.

He was with International Monetary Fund (IMF) between 1990 and 1995 and worked on the US, India, Bahamas and Myanmar desks. He was on deputation (1996-1997) from the IMF to RBI.

Besides controlling inflation, which has breached 6 per cent target, Patel will face another important task of carrying forward the clean-up exercise at banks, particularly those in the public sector. Besides, he may see a new breed of players coming up in the banking sector, including with full- fledged banking licenses as well as in niche segments.

So far as in his tenure at RBI, he has largely kept away from other fora of public speaking -- something the incumbent Governor Rajan loved doing and earned flak for.

Being the brain behind the inflation-targeting framework, some quarters say it is fair to assume that Patel will continue with the RBI's focus on managing inflation, which has come under criticism from several quarters because of high rates.

In a June 2016 note, Japanese brokerage Nomura had classified Patel as the only one among the seven speculated successors under the "hawk" category.

"As a deputy governor in charge of Monetary Policy, Patel's (possible) appointment would imply continuity of the present monetary policy. He is generally perceived as more hawkish," its economists had said.

Even though past governors have had difficulty while working with the government and the finance ministry to be precise, the Gujarati-speaking Patel's relationship with New Delhi is a subject open for discussions and will be keenly watched.

Interestingly, amid government talk of not getting fixed to a single fiscal deficit number and having a target, the Nomura note described Patel as a "fiscally conservative" person.

"He is also fiscally conservative, as has argued in the past that the government's medium-term fiscal consolidation and rebalanced expenditure policy (away from revenue and towards capex) should support disinflation," the brokerage had noted.

Patel was also a Consultant (1998-2001) to the Ministry of Finance, Department of Economic Affairs, New Delhi.

Between 2000 and 2004, he worked with several central and state government high level committees, such as, Task Force on Direct Taxes and Group of Ministers on Telecom Matters.

Patel has also had an association with the country's largest corporate Reliance Industries as president of its business development, the then non-banking lender IDFC, and Gujarat State Petroleum Corporation where he was a board member.

In 1996-97, he had nearly two years of association with the RBI, when he was sent on deputation from the IMF (where he worked during 1990-95) to advice on development of the debt market, banking sector reforms, pension fund reforms, real exchange rate targeting and evolution of the forex market.

This was followed by a three-year stint as a consultant with the Department of Economic Affairs in the Finance Ministry.


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urjit patel rbi governor monetary policy raghuram rajan