Reserve Bank of India (RBI) Governor Shaktikanta Das.
Shaktikanta Das, who has been at the helm of the Reserve Bank of India for six years, will come to the end of his contract on December 10. With just over three weeks to go, there’s been no indication from the government or the RBI if Das, 67, will be given an extension or be replaced. The Appointments Committee of the Cabinet, which comprises Prime Minister Narendra Modi and Home Affairs Minister Amit Shah, has the final say on the position.
Economists are already calibrating their rate-cut expectations following the election of Donald Trump as US president — who threatens to upend global trade with widespread tariffs — and data last week showing a spike in India’s inflation to above the 6% upper-end of the RBI’s target band. Most analysts have already ruled out a December rate cut, with some, including State Bank of India economist Soumya Kanti Ghosh, seeing a move only in April next year.
Das’s position at the RBI “will definitely have an impact because ultimately the rate decision is based on the voting of the monetary policy committee members,” said Teresa John, an economist at Nirmal Bang Institutional Equities. There’s “not much difference” if Das remains in his post, but “if there’s a new person we don’t really know the view of the new person.” Speculation among economists and some bureaucrats in New Delhi is that Das is favoured to get an extension on his contract given his steering of the economy through shocks such as the pandemic. No other notable candidate names for the governor’s position have been doing the rounds in the media or among analysts.
Modi has also shown a preference for continuity in his third term, having retained key ministers in his cabinet and advisers as he looks to deliver on an ambitious goal to make India a developed nation by 2047.
Spokespeople for the Prime Minister’s Office, Ministry of Finance and the RBI didn’t respond to requests for information. Das himself has sidestepped any questions about his future when asked about it publicly.
The government will also need to fill the position of Das’s deputy in charge of monetary policy, Michael Patra, whose term ends in January. His job was already advertised earlier this month. In October, the government also appointed three new members to the MPC, which decides interest rates.
“The MPC decision is a cumulative decision” when it comes to interest rates, said Sakshi Gupta, economist at HDFC Bank Ltd. “But the shape and form of MPC will perhaps have a bearing on RBI’s views on what is happening to growth and whether they can look through some of the food inflationary pressures that we are seeing.”
Das has been relatively hawkish on inflation, refraining from cutting interest rates despite the Federal Reserve’s recent pivot and growing calls for easing.
First appointed in 2018, Das’s contract was extended three years later, with that announcement made well over a month before his term ended. If he’s given another extension beyond 18 months, it will make him the longest-serving governor of the central bank since Benegal Rama Rau, who served for more than 7 years between July 1949 to January 1957.
“Das has done an incredible job,” said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank Ltd. “There is a high probability that his term will get extended.”
A long-time bureaucrat, Das took the helm at the central bank after his predecessor Urjit Patel resigned unexpectedly. He’s avoided public disagreements with the government — unlike Patel and former governor Raghuram Rajan — allowing for better co-ordination of monetary and fiscal policy.
During his six-year term, he’s focused on stabilising the rupee by building up foreign exchange reserves to about $700bn, the fourth-largest stockpile in the world.
‘India central bank chief’s term likely to be extended further’
The Indian government is likely to extend the term of central bank governor Shaktikanta Das for a second time, three sources with direct knowledge of the matter told Reuters, an unprecedented move that would make him the longest serving chief since the 1960s, reports Reuters.
Das was one of the most trusted bureaucrats in Prime Minister Narendra Modi’s administration before he was appointed to lead the Reserve Bank of India in December 2018, at a time when the relationship between the government and the regulator was tumultuous.
Das, whose current term is due to end on December 10, has already been the RBI’s governor for longer than the typical five-year maximum of recent decades and a further extension would make him the longest-serving since Benegal Rama Rau, who filled the role for 7-1/2 years between 1949 and 1957.
Two government sources with direct knowledge of the matter said no other candidates are being considered at this point nor had any selection committee been set up, with Das’ term likely to be extended for at least another year. The decision is due to be announced after polling in Maharashtra state elections is complete, a third source, also with direct knowledge of the matter said.
The country’s Election Commission bars the ruling party from making ad-hoc appointments that could affect voter behaviour.
The finance ministry, prime minister’s office and the central bank did not immediately respond to e-mailed requests for comment.
The three sources, who did not wish to be identified due to the confidential nature of the matter, said the final decision would be taken by the Prime Minister.
