With the appointment of Shaktikanta Das, the bureaucracy has wrested back the post of RBI Governor after a five-year hiatus that saw two economists occupy the post.
It is easy to dismiss Mr. Das’s appointment as reward for a loyalist-bureaucrat who manned the war room in the Finance Ministry during the difficult days post-demonetisation. But that would be grossly unfair to Mr. Das, who brings to the post rich experience from his days spent in the finance and industry ministries in his home state of Tamil Nadu, and in North Block.
It will not be easy for him at Mint Street initially. Every move of his will be scrutinised, given the circumstances of his appointment. Whether we like it or not, his actions, at least in the initial days, will be viewed through the prism of his perceived closeness to the current ruling dispensation at the Centre. Global investors and international agencies, including raters, will also be subjecting his moves to the test of independence.
He will be treading on egg shells for sure when it comes to resolving the outstanding issues that the RBI has with the Centre and which were probably the cause for his predecessor’s early exit. Even if he genuinely believes, based on merits, that one or more of the ticklish outstanding issues have to be conceded in the Centre’s favour, he will find it difficult to do so without drawing adverse comment. But those who know him well attest that he has a good, steady head and is the best choice right now.
Mr. Das comes with three big advantages straightaway. First, he’s obviously trusted by the top leadership at the Centre; second, he knows how the wheels of power turn; and third, those sitting in the seats that matter in North Block and the PMO are his trench-mates. Indeed, the fact that he’s from the steel-frame of the government, immediately takes away a major cause of uneasiness between the RBI and the Centre.
He has illustrious predecessors to look up to in Y.V. Reddy and Duvvuri Subbarao, who were also bureaucrats before they moved to Mint Street. These gentlemen became fiercely independent once they moved to the RBI. Mr. Das now has the big challenge of living up to their high standards.
