The government of India has named Urji Patel as the new governor of its central bank. Patel was formerly the deputy governor in charge of monetary policy, and will now serve at the helm of the Reserve Bank of India (RBI) for the next three years. He was chosen as the replacement for Raghuram Rajan, who decided to return to academia after the completion of his first three-year term. Mr Rajan was formerly a chief economist for the International Monetary Fund, and was celebrated for reducing the double-digit inflation rates he inherited by half. Rajan proposed a new government strategy of inflation targeting, a measure developed by Urji Patel.
In its statement to the press, the government stated “The Appointments Committee of Cabinet has approved the appointment of Dr. Urjit R. Patel as Governor, Reserve Bank of India for a period of three years,” a move favoured by many in RBI. The Yale graduate had been the head of the monetary policy department since 2013 and had been voted for another three-year term in January. Following Rajan’s announcement not to recontest in June, Patel was seen as the most likely to maintain consistency. The government has a central target for inflation of 4 percent, with a 2 percent leeway in the medium term. The rate was up to 6.07 percent in July, making it the fourth consecutive month in a row it has stayed above 5 percent.
The government will be announcing a new monetary policy committee consisting of three RBI officials including Dr Urji Patel, and three others to be picked by them. Managing the inflation rate is a key objective of the government, to ensure maximum utility of investments needed to bolster India’s dipping economic growth.