Ending weeks of speculation, the Modi government has named Urjit Patel as the 24th governor of the Reserve Bank of India and to successor to Raghuram Rajan. At present he is working as key deputy to Rajan. The announcement was made on a day markets were closed, a style similar to what Rajan adopted in June to announce his decision to not seek a second term.
The second Gujarati, and a Patel, to hold the seat, Urjit was selected from a list of five contenders, including chief economic adviser Arvind Subramaniam, economic affairs secretary Shaktikanta Das, and former World Bank chief economist Kaushik Basu. The task to select the next RBI governor was in the hands of a selection committee, who shortlisted candidates. The final decision however, was left with Modi in consultation with finance minister Arun Jaitley. No stranger to the workings of the RBI, Urjit has been involved with all important decisions at the bank; right from reworking the way key policy rates are decided to modernising the way RBI functions.
A government official said Patel's rapport with Modi helped weigh the decision. "They have known each other for long with Patel agreeing to join the board of Gujarat State Petroleum Corporation at a time when Modi was Gujarat chief minister and a distant PM prospect and when few people with Patel's academic credentials were willing to take the risk of associating themselves with Modi because of the political adversity that he faced."
Kenyan-born Gujarati, Urjit Patel's grandfather Purshottambhai migrated to the African country in 1932. Native to Mahuda, Kheda district, both him and his father Ravindra were born in Kenya. His cousin, Retd. Major Dhirubhai Patel said, "My grandfather Gordhanbhai and his grandfather were both cousins. Urjit's father had a paint thinner making factory in Nairobi called Rexo Product."
The deputy governor has had a long association with Gujarat. He was appointed in the board of the Gujarat State Petroleum Corporation in 2006-07 when Narendra Modi was chief minister. Company Secretary of GSPC, Sandeep Dave said, "Patel worked with us till he was made a deputy governor of the RBI. His knowledge of finance and energy sectors was valuable to the GSPC. He was very particular about details and his contributions were always useful."
Meanwhile, the Premiere Club in Nairobi rejoiced over the news as they recall a young Urjit who accompanied his father to the club. IG Patel's wife Alaknanda fondly recalled him as a special friend of the family for 20 years. "Economics introduced us to each other. We like him a lot. He is very bright, knowledgeable and has wide experience. Urjit is perfect for the RBI governor's post as he has worked with some of the biggest think tanks and institutions in the world," said Alaknanda.
A lot's riding on the new governor as he is expected to start deciding interest rates from the October 4 policy announcement onwards, along with chairing the first meetings of the Monetary Policy Committee. Rajan will probably leave behind leftover work of unclogging the credit pipeline and resolve stressed assets; a task left for the new governor to take up.
