Rajan successor announcement imminent

A decision on Reserve Bank of India Governor Raghuram Rajan’s successor is imminent and could be announced as early as next week, as the government looks to curb speculation and uncertainty regarding the matter.

Business Standard has learnt from senior government sources that Prime Minister Narendra Modi and Finance Minister Arun Jaitley were close to making a decision on who would be the 24th RBI governor. The matter would not take time as it was a decision to be taken by Modi and Jaitley and does not involve any selection committee, officials said. “The prime minister and finance minister will decide on the next RBI governor. There won’t be a prolonged process since no panel or committee of any sort is involved. A decision is imminent,” said a government source.

An announcement could be made soon after Jaitley returns from a five-day trip to China, starting Thursday morning.

Top government sources had said on Monday that the names in contention included former RBI Deputy Governors Rakesh Mohan and Subir Gokarn, RBI Deputy Governor Urjit Patel, Economic Affairs Secretary Shaktikanta Das and Chief Economic Advisor Arvind Subramanian.

Modi and Jaitley’s first preference to lead the central bank after Rajan could be an economist rather than a bureaucrat, said officials, indicating that Subramanian and Gokarn might possibly emerge as front runners. “We could have another economist with a broader macroeconomic view,” said a second official. In his letter to RBI employees on Saturday, Rajan had said he had decided to return to academics after consultation with the government. The move surprised observers, many of whom believed he would receive a second term.

The government’s critics say that the prime minister failed to rein in vicious and unprecedented personal attacks on the central bank chief by Rajya Sabha MP Subramanian Swamy.

The Centre has since then maintained that it had acted in a mature manner and had paid no heed to what an official has described as ‘outside noise’.

Sources have even said that the centre was open to giving the Governor another three-year term, but Rajan wanted a possibly shorter term.