Shaktikanta Das, new governor of RBI: Staunch supporter of demonetisation, worked closely with central bank earlier

Shaktikanta Das, who retired as Economic Affairs Secretary in May 2017, has been appointed as the new governor of the Reserve Bank of India after Urjit Patel tendered his resignation on Monday. Patel resigned following weeks of tension over the government’s demand for the central bank to allow some bad-debt-laden public sector banks to lend more easily. The government has also pushed the RBI to hand over some of its surplus reserves to help fund the fiscal deficit.

Das has been appointed for a term of three years. He has resigned as the member of 15th Finance Commission today. A retired Indian Administrative Officer from the Tamil Nadu cadre, Das was until his latest appointment was a former member of the Fifteenth Finance Commission of India and Sherpa to G20. He has worked closely with the RBI and was former economic affairs secretary from 2015-17.

“Bonds and rupee should react positively following this news,” said Ashish Vaidya, executive director and head of trading at DBS Bank in Mumbai.

Das played a key role in demonetisation drive in 2016 and was seen as defending the government, according to media reports. He came under fire for his pro-demonetisation stance and he was the most visible and vocal bureaucrat at the time Modi withdrew the high-value bank notes to fight tax evasion.

Shaktikanta Das, new governor, RBI. PIB

Shaktikanta Das, new governor, RBI.
PIB

In an interview to the Times of India, Das said the impact of demonetisation was 'transient'. He said that 'process of remonetisation got completed fairly fast, in fact by end December." He said the medium and long-term gains of demonetisation with GST was found to outweigh the short-term pain, he said in the interview.

“Bonds and rupee should react positively following this news,” said Ashish Vaidya, executive director and head of trading at DBS Bank in Mumbai. “He is a bureaucrat and will help in improving the RBI-government relationship. We expect the RBI to take a pragmatic approach under him, be pro-growth and change its stance going ahead given that inflation has come off sharply.”

Das, 61, is a member of the federal finance commission, and one of India’s G20 representatives. He had been widely seen as a contender for the top job at the RBI after the exit of former governor Raghuram Rajan in 2016.

He previously served on the central bank’s board. Das came under fire for his pro-demonetisation stance and he was the most visible and vocal bureaucrat at the time Modi withdrew the high-value bank notes to fight tax evasion.

Last year, Das criticised the methodology of global rating agencies and sought a sovereign rating upgrade. Das has worked extensively in the budget division under both Modi’s government and the previous coalition led by the Congress party.

While in the finance ministry, Das was involved in drafting India’s Insolvency and Bankruptcy code, aimed at protecting small investors.

Foreign and domestic investors earlier said any openly political appointee with little macro-economic experience, would not sit well in equity, currency and debt markets that have already sold-off following setbacks suffered by Modi’s Bharatiya Janata Party in state polls this week.

Das, a history graduate from the prestigious St. Stephen's College in Delhi, was brought to the Finance Ministry soon after the BJP-led NDA government came to power in mid-2014 and given charge of the crucial revenue department. He was later moved to the economic affairs department, which essentially deals with monetary policy and the RBI.

"Extremely seasoned & matured official with immense experience of Finance. He is a brilliant team leader,a great consensus builder & highly communicative. Will focus on India’s economic growth while ensuring RBI’s autonomy. Gr8 choice!", NITI Aayog CEO, Amitabh Kant, said in a tweet on Das' appointment as RBI governor.

--With agency inputs

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Updated Date: Dec 11, 2018 20:13:14 IST

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