Inflation expert Michael Patra to be new deputy governor of RBI

Soft spoken, articulate, and celebrated for his disciplined and original research work, Patra is known to take hawkish stance who constantly prefers rate hikes

Michael Debabrata Patra, 59, has been appointed the Reserve Bank of India (RBI) deputy governor for three years. The post fell vacant after Viral Acharya resigned on July 23 last year.

Patra, as executive director of the central bank, was the principal advisor to the Monetary Policy Department since July 2012. He was also an internal member of the monetary policy committee (MPC). He was in deputation at the International Monetary Fund (IMF) as senior adviser to executive director (India) from December 2008 to June 30, 2012. During the period, Patra was advising the executive board of the IMF in dealing with the global financial crisis and the Euro area sovereign debt crisis. 

“A practising central banker from inside the system and remarkably familiar with Indian financial markets, Dr Patra is sine qua non for monetary policy making,” said Soumya Kanti Ghosh, group chief economic advisor to State Bank of India.  “Dr Patra has also pioneered research in the Indian context on monetary conditions index, exchange rate pass through, market microstructure and monetary policy without money,” Ghosh said. 

While Patra was seen as favourite for the post, many other high-profile names were under contention and that may explain why the government took six months to fill the vacancy. With Patra’s appointment, the RBI has four deputy governors. As deputy governor, Patra will likely get the monetary policy department, which is headed by Deputy Governor B P Kanungo. The internal RBI members of the MPC will have to be reshuffled as the executive director succeeding Patra in RBI should be the new inductee in the committee.

Patra is much loved among his colleagues in the department. “Patra listens attentively to even the junior-most officer and is open to ideas,” one of his colleagues said. Like Governor Shaktikanta Das, Patra can be expected to adopt a consultative and cooperative approach with stakeholders in policy making.

Sitting next to the governor in policy meetings, Patra can be seen answering critical technical questions in a lucid manner. He prefers staying off the limelight, but when it comes to media workshops on policy, he is there to communicate the complex work in a simple, easy manner.

Soft spoken, articulate, and celebrated for his research, Patra was known for hawkish stance, preferring rate hikes at any hint of inflation firming up. However, he advocated rate cuts after Das became the RBI governor, anticipating a slowdown in growth. His penchant for checking inflation was obvious because Patra was a key  architect of the policy framework that aimed for flexible inflation targeting.

According to the mandate, the RBI will try to keep CPI inflation at around  4 per cent, with a band of 2 percentage points on either side. If the inflation moves outside 2-6 per cent for three successive quarters, the RBI will have to give a written explanation to the Centre why it failed to contain the inflation within the range. While that is unlikely to happen anytime now, even as inflation has hit a 65-month high of 7.35 per cent in December, Patra’s expertise in handling the inflation would be much required at a time when the RBI is also grappling with a slowdown. 

To revive growth, RBI would be required to cut rates and pump up liquidity support. But that threatens to push up inflation even further. Patra and his colleagues in the MPC will have to trudge through this uncertainty.

Patra is a career central banker who joined RBI in 1985. He has worked in various other departments as well, including the Department of Economic Analysis and Policy in charge of international finance, money, and banking. 

Besides, Patra received professional training at the IMF Institute on Financial Programming and Policy and at the Centre for Central Banking Studies, Bank of England. He is also a Fellow of the Harvard University where he undertook post-doctoral research in the area of financial stability. He has a PhD in Economics from the Indian Institute of Technology, Mumbai. His PhD thesis was entitled "The Role of Invisibles in India's Balance of Payments: A Structural Approach".

He has published papers on inflation, monetary policy, international trade and finance, including exchange rates and the balance of payments.