Govt likely to announce Rajan successor in a month

The government is in no hurry to announce the new Reserve Bank of India (RBI) governor, and is likely to happen only by the end of August, top sources in the finance ministry said on Thursday.

business Updated: Jul 29, 2016 12:39 IST
RBI,Raghuram Rajan,Kaushik Basu
Reserve Bank of India (RBI) governor Raghuram Rajan’s term ends on September 4.

The government is in no hurry to announce the new Reserve Bank of India (RBI) governor, and is likely to happen only by the end of August, sources said on Thursday.

“Raghuram Rajan’s tenure will end only in September and announcing the new governor much before that will send a wrong signal,” said an official in the finance ministry, who did not wish to be named. The source added that an early announcement will give the impression that the government is keen to get rid of Rajan.

The government has already clarified that the decision on a successor will be taken by the Prime Minister Narendra Modi in consultation with finance minister Arun Jaitley.

“The successor has already been decided, it is the announcement that has to be made. And, it will be done before Rajan’s term ends,” said another source.

Names, including State Bank of India chairman Arundhati Bhattacharya, RBI deputy governor Urjit Patel, former deputy governors Subir Gokarn and Rakesh Mohan, former economic advisor Kaushik Basu, NITI Aayog chairman Arvind Panagariya, chief economic adviser Arvind Subramanian and economic affairs secretary Shaktikanta Das, have been doing the rounds.

Read: Pick the next RBI governor

“The preference is for someone who has international acceptance as an economist and has served the Indian government in some capacity,” sources told HT. However, they said that given the criterion mentioned, the race may narrow down to Gokarn, Basu and Subramanian, who have “strong international presence.”

Gokarn is currently the executive director on the board of International Monetary Fund (IMF). He represents India, Bangladesh, Sri Lanka and Bhutan.

Basu, who was earlier chief economic adviser to the finance ministry, just stepped down as the World Bank’s chief economist.

Before joining the government as the finance minister’s economic advisor, Subramanian has served as an economist at the IMF.

Speculation aside, World Bank country director, Onno Ruhl said: “All RBI governors have been extremely competent and India’s central bank is one of the most regarded globally. Whoever takes over from Dr Rajan, we are certain, will be equally competent and will maintain the independence of RBI”.

RBI governor Raghuram Rajan recently announced his decision to go back to academia after his term ends on September 4.

First Published: Jul 28, 2016 19:12 IST