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HomeEconomyShaktikanta Das, the man who spearheaded demonetisation, is new RBI governor

Shaktikanta Das, the man who spearheaded demonetisation, is new RBI governor

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A retired IAS officer, Shaktikanta Das was economic affairs secy during demonetisation, and faces a host of challenges left behind by Urjit Patel.

New Delhi: The Narendra Modi government Tuesday appointed former bureaucrat Shaktikanta Das as the 25th governor of the Reserve Bank of India.

Das has been appointed for a period of three years by the appointments committee of the cabinet, the government said in a statement.

He steps in to fill the position that fell vacant after the abrupt resignation of Urjit Patel Monday.

The face of demonetisation

A 1980 batch IAS officer of the Tamil Nadu cadre, Das retired as secretary of the Department of Economic Affairs in the Finance Ministry in May 2017. The soft-spoken bureaucrat held senior posts in the tenures of both the Congress-led UPA and the BJP-led NDA governments.

Das was the face of the government during the demonetisation drive, in his role as the economic affairs secretary. He worked closely with the RBI to streamline the printing of the new currency notes, and coordinated with other government departments to ensure adequate supply of notes across India.

Even after his retirement, Das has continued to find favour with the Modi government. He is the government’s sherpa (emissary) in the G-20, as well as a member of the 15th Finance Commission.

Also read: Urjit Patel seen as India’s hero after he martyrs himself

Range of challenges

Das will face the challenge of preserving RBI’s autonomy while ensuring that contentious unresolved issues between the government and the RBI, like the transfer of surplus RBI reserves to the government and relaxation of lending norms for weak banks, are resolved amicably.

His appointment comes at a time when the relationship between the central bank and the government is at an all-time low over disagreements over a range of issues, including RBI’s autonomy, its inability to prevent the massive fraud allegedly perpetrated by jewellers Nirav Modi and Mehul Choksi, its lack of regulatory powers over state-run banks, and its unilateral decision to do away with restructuring schemes for stressed assets that adversely impacted bank balance sheets.

The government is also threatening to invoke Section 7 (1) of the RBI Act for issues concerning liquidity and relaxation of prompt corrective action framework for state-run banks.

Das has had multiple stints in the Finance Ministry in various capacities, and is well-versed with the functioning of many departments. That should work in his favour in navigating the tense relationship between the government and the central bank, and ensure better communication between the both — a key failing attributed to Patel.

Also read: Urjit Patel resignation makes clear no economist can function under Modi govt, says Moily

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  1. It will become apparent within a few weeks if the new Governor is his own man or – one hopes not – Our man on the spot, as the Bank of America ad used to say.

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