India appoints Urjit Patel as next RBI governor

New Delhi/Mumbai, August 20

India’s government promoted Urjit Patel, a deputy governor in charge of monetary policy at Reserve Bank of India, to serve as its next governor for a three-year term, it said today.

He will replace Raghuram Rajan, a former International Monetary Fund chief economist who stunned financial markets in June by announcing he would step down in September and return to academia after a single three-year term at the RBI.

Patel, 52, headed a panel that recommended landmark changes to monetary policy in India, including a switch to inflation-targeting and the creation of a panel to set interest rates. He will start his three-year term on September 4.

“The Appointments Committee of Cabinet has approved the appointment of Urjit R Patel as governor, RBI for a period of three years,” said the statement from the government.

Patel, who has a doctorate from Yale, had widely been seen as ensuring the most continuity among the candidates believed to be in the running to be the next governor.

He had been reappointed in January for another three years as deputy governor in charge of monetary policy, a department he has run since 2013. Seen as a close lieutenant to Rajan, Patel will now get to implement the policies he had helped shape.

Government is soon expected to announce composition of a six-member monetary policy committee to decide on interest rates. It will be made up of himself, two other RBI officials and three members appointed by the government.

Rajan, who succeeded in halving inflation rate from double digit levels prevailing when he took over, also persuaded government to adopt inflation targeting, setting a medium term central target of four per cent, within a range of two to six per cent — another policy endorsed by Patel. The new governor takes over at a time when inflation has bust out of the top end of that range. Consumer inflation accelerated to 6.07 per cent in July.