Shaktikanta Das, former top bureaucrat in the Finance Ministry and key face of the government during demonetisation, has been appointed as Governor of the Reserve Bank of India for a period of three years. The Appointments Committee of the Cabinet approved the move a day after Urjit Patel abruptly resigned from the post citing “personal reasons”.
Das, who retired as Secretary of the Department of Economic Affairs, had served in various capacities in the Finance Ministry, including as Secretary in the Revenue department and as a key official in the Budget division. After his retirement on May 28, 2017, he was appointed as a member of the 15th Finance Commission and as the G20 Sherpa.
Das, 61, a 1980-batch IAS officer of the Tamil Nadu cadre, is a post-graduate in history from St. Stephen’s College, Delhi. During demonetisation, he held regular briefings on behalf of the government as Economic Affairs Secretary to announce key changes, even as then RBI Governor Patel maintained silence.
Among the many plans during that phase in 2016, Das had announced a proposal to put indelible ink on the index fingers of people to prevent them from exchanging old currency multiple times beyond specified limits. Following widespread outrage, the move was later withdrawn.
In January 2017, after External Affairs Minister Sushma Swaraj’s objection to doormats depicting the Indian flag being sold on Amazon’s Canada portal elicited “regret” from the company, Das had tweeted on the issue, asking the e-commerce firm to “behave” and “desist from being flippant about Indian symbols & icons”.
But market players see Das as someone who would be more communicative than the reclusive Patel, and hope that he would reopen lines between the government and the RBI. The appointment also comes ahead of the crucial RBI Board meeting on December 14.
Banking sources expect Das to be “more realistic” in understanding the need for leniency on public sector banks. They also expect discussions to gather pace on pulling some PSU banks out of the RBI’s Prompt Corrective Action framework.
Speaking to The Indian Express, former RBI Governor C Rangarajan said: “Das has had a long innings in economic affairs. He has dealt with multiple economic problems. He should be able to fulfill the RBI’s functions in an eminent way. The fact that he is from the government should not be held against him as many eminent government officials have served in top RBI positions in the past… he should act towards maintaining the integrity and autonomy of the RBI.”
According to a leading economist, who spoke on condition of anonymity, the appointment “should come as a big relief to the markets since there will be realignment of some extreme positions held by the RBI, including on the quantum of capital the central bank should keep to meet all contingencies”.
Reflecting his thinking on central banks aiming to achieve multiple objectives, Das had said in a tweet on October 18: “Central Banks across countries have a very critical role at the current juncture. The challenge is to try and read the situation and take decisive steps in pursuit of their multiple responsibilities.” On September 16, he advised against issuance of offshore NRI bonds.
“The Government, in selecting an experienced economic expert, has avoided disruption and imparted huge confidence to investors and industry,” CII President Rakesh Bharti Mittal said.