Urjit Patel, Deputy Governor of Reserve Bank of India (RBI) in-charge of the monetary policy department, has been re-appointed for a term of three years.
Mr. Patel, 52, who will complete his three-year term on January 10, could become the longest serving deputy governor in recent times if he serves the full three-year term. Most of recent deputy governors served a maximum of five years.
“The Government of India today re-appointed Dr. Urjit R. Patel as the Deputy Governor of the Reserve Bank of India, for a further period of three years with effect from taking charge of the post on or after January 11, 2016, or, until further orders, whichever is earlier,” according to a statement from the RBI.
The government has formed a search panel, which interviewed several candidates in December, including Mr. Patel and two other Executive Directors of RBI. A Deputy Governor of RBI can be appointed for a period of five years or till the age of 62, whichever is earlier. Mr. Patel, who was appointed as the Deputy Governor in January 2013 had about two decades of experience across sectors including financial, energy and infrastructure sectors.
But his significant task came after Raghuram Rajan appointed him to head of committee to review the monetary policy framework.
Mr. Patel who holds a Doctorate (Ph.D) in Economics from Yale University and is a graduate of the University of London and Oxford, had his task cut out. RBI’s monetary policy stance was under severe criticism as inflation continued to haunt policy makers for more than two years.
The recommendations of the Urjit Patel Committee were radical. The committee proposed inflation targeting as the central bank’s prime objective and changed the main gauge for inflation to consumer price index based inflation from wholesale based price index.
There were many more. This is probably the first committee which explicitly said that government should not intervene in the functioning of banks, mainly in the public sector ones. The committee also advised the setting up of a monetary policy committee with the governor as its head, which will held responsible if inflation target is not met.
The government and RBI moved promptly to implement the Patel Committee recommendations. Retail inflation is now the central bank’s main yardstick for price rise, and most importantly the government and the central bank has now entered into an historic agreement to reach a particular level of inflation within a specified time frame.
According to the agreement, the RBI will target 4 per cent inflation by the end of financial year 2016-17 and for subsequent years, with a band of +/- 2 per cent.
RBI has four Deputy Governors, two are from outside, a commercial banker and an economist while two others are promoted from within its ranks. The other three Deputy Governors of RBI are: H.R. Khan, S.S. Mundra and R. Gandhi.
