The Narendra Modi government, on Tuesday, appointed Shaktikanta Das as the governor of the Reserve Bank of India (RBI). Das’ appointment comes in the wake of former governor Urjit Patel’s abrupt resignation on Monday, December 10.
The appointments committee of the cabinet has cleared Das’ appointment for a period of three years, as per an official order issued by the department of personnel and training.
Das, who is believed to be close to Prime Minister Narendra Modi, was the economic affairs secretary when Modi announced demonetisation in November 2016.
Das was criticised for his pro-demonetisation stance and he was the most visible and vocal bureaucrat when the government announced that the Rs 500 and Rs 1000 notes would no longer be legal tender.
Who is Shaktikanta Das?
Das has been a history graduate from St. Stephen’s College, Delhi. He is a 1980-batch Tamil Nadu cadre IAS officer, and an experienced bureaucrat.
He has worked extensively in the budget division under, both, the ruling government and the previous coalition led by the Congress party.
He was brought to the Finance Ministry after the BJP-led National Democratic Alliance (NDA) government came to power in 2014. Das was given charge of the revenue department. In the finance ministry, Das was involved in drafting India’s Insolvency and Bankruptcy code, which was aimed at protecting small investors.
He was then moved to the economic affairs department, which essentially deals with monetary policy and the RBI. There, he oversaw the re-monetisation of the economy after PM Modi announced the sudden decision. In 2017, Das criticised the methodology of global rating agencies and sought a sovereign rating upgrade.
Appointing Das to overlook India’s apex bank can be seen as a move to align the RBI with the Centre’s path.
Das behind GST implementation
Das was the brain behind implementing the Goods and Services Tax (GST). He was also instrumental in pushing GST soon after the Modi government took charge.
As revenue secretary, he worked closely with Finance Minister Arun Jaitley and the empowered committee of state finance ministers, to break the deadlock and draw up the draft legislation.
Additionally, Das was responsible for Tamil Nadu’s successful SEZs (special economic zones) and industrial policy. He withstood political pressure to allot government land to private IT companies in Tamil Nadu without having a bidding process.
The very first issue that Das is likely to face will be the transfer of government reserves. The RBI is not yet ready to part with its reserves, whereas the government has asserted that this can be done as the money belongs to the people of India. Regardless of what way it is seen, there is no clarity on the way forward.
Another key issue that created a rift between the RBI and the government was the prompt corrective action (PCA) framework, under which as many as 11 public sector banks are under pressure due to enormous stressed assets. The government has said that the stringent norms are hurting credit growth.
Das will also have to reach a conclusion on the role of the RBI’s board in the decision-making process.
Elton Gomes is a staff writer at Qrius