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Rajan, Mayaram in race for RBI governor’s post

Governor Duvvuri Subbarao’s remarks on Saturday that he has not yet been offered an extension when his five-year term as head of the RBI comes to an end, has triggered speculation about his likely successor. HT reports.

india Updated: Jul 22, 2013 01:51 IST
HT Correspondent
HT Correspondent
Hindustan Times

Governor Duvvuri Subbarao’s remarks on Saturday that he has not yet been offered an extension when his five-year term as head of the Reserve Bank of India comes to an end in September, has triggered speculation about his likely successor at a time when the nation faces economic worries.

RBI deputy governor Urjit Patel, Planning Commission member Saumitra Chaudhuri, economic affairs secretary Arvind Mayaram and chief economic adviser Raghuram Rajan are among policy makers in the government said to be in the running for the office that determines interest rates, oversees banks and manages India's foreign exchange reserves.

There is also speculation that the government may extend Subbarao's term by a year to ensure continuity in policy thinking to help India tide over the current economic crunch that has led to a weakening rupee.

Subbarao got a two-year extension in August 2011. On Saturday, he said he has not got an offer for another extension.

“No offer has been made so far, so there is no question of accepting so far. It is a hypothetical question. As I said before, I must move on,” Subbarao, who turns 64 next month, said in Moscow.

Urjit Patel, who was named deputy governor last January, has worked with The Boston Consulting Group, International Monetary Fund (IMF) and the finance ministry's economic affairs department.

Saumitra Chaudhuri, a Planning Commission member since 2009, is among India's topmost policy makers. He is also a member of the Economic Advisory Council to the Prime Minister.

Arvind Mayaram, a 1978 batch IAS officer of the Rajasthan cadre, took over as the economic affairs secretary last August, and has played a key role in shaping economic policy in recent times, heading a committee on foreign investment.

Raghuram Rajan, a former IMF chief economist and Chicago University professor famed for his perceptive analysis of the global financial crisis of 2008, took after as India's CEA last year.

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Subbarao was not the first serving governor to get an extension. His predecessor YV Reddy was given a five-year term from the start.

Reddy's predecessor Bimal Jalan, who served for six years, received an extension --- as did C Rangarajan, who was governor before Jalan, for five years.

Subbarao's tenure has been marked by global crises, while policymakers' struggled to balance growth with price stability at home.

Subbarao took over as RBI governor on September 5, 2008 --- a bare 10 days before the stunning collapse of Wall Street icon Lehman Brothers triggered a global credit crisis.

While India negotiated that crisis relatively unharmed, the latter part of Subbarao's tenure spawned a stark dilemma as fiscal and monetary measures to tame inflation, while failing to hit the target, cast side effects on growth. He has presided over decisions to repeatedly raise lending rates to cool prices.

In the last few weeks, the sharp decline in the rupee has added to the array of problems for the RBI governor who has, so far, withstood pressure from all quarters to slash lending rates.

He has also ushered in key reform measures including savings bank rate deregulation and a plan to issue new bank licences.

First Published: Jul 21, 2013 21:15 IST