From demonetisation jokes to becoming RBI’s knight in shining armour, Urjit Patel is now the real rockstar of Mint road

When Urjit Patel took the Reserve Bank of India (RBI) governor’s post in September 2016, he was seen as a big departure from his predecessor Raghuram Rajan. ‘Rockstar’ Rajan was eloquent, aggressive and to an extent confrontational in his exchanges with the government and often ventured into issues far beyond his mandate in his public speeches. Logically, the Narendra Modi-government wasn’t a big fan of Rajan as the media was. Maverick BJP leader Subramanian Swamy went to town waging a war against Rajan even leveling personal allegations and seeking his ouster. Ultimately, Rajan had to go at the end of his first tenure. On the other hand, Patel was considered to be the kind of man the government wanted in the office–someone who would keep his head down and work silently, someone who wouldn’t talk beyond what is required by his pay-grade and more importantly, someone who wouldn’t confront and become a daily headache, embarrassment to the ruling government. Patel entered the scene as just the right fit for North Block. That image continued during the controversial, politically-sponsored demonetisation roll-out, when the RBI, despite being the authority on currency, remained obediently in the sidelines from the very beginning. Patel was criticised even by the former RBI officials who pleaded openly to arrest the unmaking of the RBI.

Demonetisation was nothing but a trial by fire for Patel that pushed him towards a do-or-die battle to save the image and credibility of a great institution. That was his first big challenge after taking charge as governor.

For D Subbarao, it was managing the global financial crisis, for Rajan, it was the US Fed shocks and a freefalling rupee and for Patel, the demonetistaion challenge thrown by the Narendra Modi government. Patel didn’t pass the demo-test. The governor was ridiculed when RBI couldn’t make the implementation hassle-free. He became the butt of social media jokes when it took the central bank a very long time to finish the counting of the demonetised notes returned to bank counters. [caption id=“attachment_3938005” align=“alignleft” width=“380”]  File image of RBI Governor Urjit Patel. AFP[/caption] There were no two arguments on how the whole episode inflicted severe damage to RBI’s integrity–something that hasn’t happened in the past even when the central bank had to walk a tightrope through multiple economic crises that originated both in India and abroad. One of Patel’s critics was Usha Thorat, a former RB deputy governor who wrote an Op-ed, A note to RBI in the Indian Express : “There have been times when the Old Lady of Mint Street was criticised for being too conservative and cautious — for not being able to keep up with innovation and markets — never has she been accused of not knowing her job. Never has she been the butt of as many jokes as in the last few days,” Thorat said. But, that’s in the past. After two years in office, Patel is exactly everything he wasn’t meant to be for the government. In India’s history, the RBI versus government relations hasn’t worsened to this level to the point of talk of Section 7 of the RBI Act coming into play. Also, speculations of the governor’s resignation in protest spooked the markets. The RBI has openly refused the government’s bid to claim a substantial chunk of its  cash reserves, refused in 2017 to entertain a demand from the finance ministry for a meeting ahead of monetary policy, did not relent on diluting the prompt corrective action plan (PCA) imposed on a dozen state-run banks and is at logger-heads with the status of the proposed payments regulator. Acharya’s public outburst of deputy governor Viral Acharya on the government interference undermining RBI autonomy is not without the consent of his boss, Urjit Patel. Acharya, who had three of his fellow deputy governors in the audience during the speech, thanked RBI Governor Urjit Patel for his “suggestion to explore this theme for a speech”.

The way Patel is spearheading the fight for RBI autonomy, to carry out its mandate standing against a powerful government makes him nothing less than the rockstar of Mint Road that Rajan was. Despite the threats of invoking Section 7, Patel has stood guard of the central bank with conviction, forcing the government to agree to a truce and acknowledge the need for the institution’s autonomy.

Patel’s next major test will come in the days ahead when the RBI board will meet on 19 November. The government-appointed nominees are likely to press for certain demands the government has been pitching for that the RBI is not comfortable with. It is a no-brainer that Patel won’t have an easy entry to his second term when his tenure comes to an end next year. But, one thing is sure. Patel won’t bid goodbye with the image of someone who succumbed to the political power centre. He continues to be a man of few words, but his silence is far more eloquent now than ever before on the independence of the central bank.