Urjit Patel: The insider

The new central bank boss is an inflation warrior

The appointment of Urjit Patel as the 24th governor of the Reserve Bank of India (RBI) should come as no surprise, considering the monetary policy framework through which the central bank will function henceforth is based on recommendations of a committee headed by him.

By giving Patel charge of the central bank, the government has provided emphatic approval to a new paradigm in India’s central bank operations.

The 52-year-old Patel was appointed deputy governor of the RBI in January 2013 by the United Progressive Alliance government. In January 2014, he headed a committee that suggested the central bank target the consumer price index and not the wholesale price index as a policy peg.

The committee proposed the RBI should try to contain inflation at 4 per cent with a deviation of 2 per cent, and if it failed to do so it should tell the government why. Inflation targeting may have its own set of critics, but the central bank will become accountable for rising prices and that will make it more credible.

 

On completing his three-year term in 2016, Patel was offered a three-year extension by the National Democratic Alliance government, underscoring his acceptance across party lines.

Born on October 28, 1963, Patel received his bachelor’s degree in economics from the London School of Economics, an M Phil from Oxford, and a doctorate from Yale University. He worked with the International Monetary Fund between 1990 and 1995 covering the US, India, Bahamas and Myanmar desks.

He was on deputation (1996-1997) from the IMF to the RBI and provided advice on development of the debt market, banking and pension reforms, exchange rate targeting, and the foreign exchange market.

After his stint at the central bank, he continued his engagement in India as a consultant (1998-2001) to the department of economic affairs in the finance ministry.

Patel has also worked in the private sector with assignments like president, business development, at Reliance Industries, and executive director and member of the management committee, Infrastructure Development Finance Company.

Between 2000 and 2004, Patel worked with several central and state government panels, such as the task force on direct taxes, the advisory committee on research projects and market studies, and the Competition Commission of India. He was part of the expert groups on state electricity boards and on the civil and defence services pension system.  Considered hawkish by central bank watchers, Patel like his predecessor Raghuram Rajan wants to bring inflation within accepted limits so that growth can take root firmly in the long run.