At the Gyan Sangam meet in Pune last January, a group of mediapersons were desperately waiting for the meeting between PM Narendra Modi and bankers to end and for financial services secretary Hasmukh Adhia to make the customary briefing.
The meeting had been going on for close to four hours and had been kept out of bounds for journalists who were promised a detailed briefing. As the meeting finally ended, a fleet of cars belonging to heads of various public sector banks and finance ministry officials could be seen leaving the sprawling venue of the NIBM. And as cars sped past the verdant complex, darkened by the huge canopy of trees, journalists, who were now rushing to the auditorium to attend the briefing, saw RBI deputy governor Urijit Patel walking out alone on the other side of the road, a briefcase in hand and hurrying on to hail a cab, his head bent, apparently to avoid the news hungry journalists.
As a few journalists crossed the road to speak to him, Patel walked on, politely declining to talk. It emerged later that much of what RBI enumerated at the Gyan Sangam - future actions on NPAs and the renewed focus on inflation targeting - had the active involvement of the deputy governor. That sums up Urijit Patel’s persona – low profile and one who tries his best to avoid publicity.
“Neither hawk nor dove, but owl. The owl is traditionally a symbol of wisdom. We are vigilant when others are resting,” one of the rare times when Urjit Patel has resorted to analogies to make his point.
For a Kenya born and one who has been educated in the UK and US, Urjit Patel has strong views on RBI’s contribution to India’s growth. “Don’t try and put us into buckets. We are doing what is necessary for the economy. The primary focus is not the investors, not the markets, it is the consumer. How do we bring inflation down to the Indian consumer so that their welfare is improved?” Patel had said in the January 2014 monetary policy review.
This then is the stance that most expect Patel to adopt. “His first challenge will be to manage liquidity during the September to December NRI deposit outflows. He will also need to keep a watchful eye on inflation which is currently trending above RBI’s upcoming 5% target,” said Pranjul Bhandari, chief India economist for HSBC Securities.
“The positive transformation set in motion by governor Rajan, starting with the recognition of problems associated with both high inflation and weak bank balance sheets, is not yet complete,” said Thomas Rookmaaker, director, Asia-Pacific Sovereigns Group, Fitch Rating. “Having served as deputy governor in the past three years, Urjit Patel is well-positioned to further institutionalize these policy changes in the period ahead.”
Apart from inflation targeting, Urjit Patel’s appointment can boost seen to actively focus on NPAs in infrastructure. In October 2014, Patel had said: “What we have to think through in infrastructure is that predominantly funding has to be from domestic sources, because infrastructure investment produces services which are non-tradeable, that is, not much by way of foreign currency -denominated revenue. For most of this investment, the entire income stream is in domestic currency. Therefore, it is almost inevitable that much of it is funded domestically. Secondly, if we get some of our policies aligned in infrastructure, especially on the energy side, we would be surprised on the up side by the outcome that would emerge out of it eventually. The challenges are fixable. Also, if one goes behind the NPA numbers related to the infrastructure sector, they are not white elephants as such. These assets generate a stream of output that has ready demand. They can quickly start bringing in cash flows for our investors and for our banking system if we fix fuel supply, reduce distribution losses, and address off take agreement design. This should be one of the main tasks going forward.”