express my disappointment over the events that led to the resignation of Dr. Urjit Patel. The sudden resignation of 24th Reserve Bank of India Governor Dr. Urjit Patel is a major embarrassment for the government. Dr. Patel’s resignation is bound to raise questions about the Centre’s ability to work with independent-minded economists.
The post of the RBI Governor is very important and it’s really unfortunate that he resigns stating personal reasons. Dr. Patel is the first RBI Governor since 1990 to step down from the post prematurely.
The choice of Dr. Urjit Patel an eminent economist, consultant and banker by PM Modi as the 24th Governor of the Reserve Bank of India had reflected the government’s preference for continuity to the Rajan tradition and the step was in the right direction. Former prime minister Manmohan Singh had termed RBI Governor Urjit Patel’s resignation as “very unfortunate” and said that it was a “severe blow” to the country’s economy. This is for the first time in the history of RBI that the Governor has resigned from the post due to disagreement with the government policies. An honest person has no place. RBI Governor has expressed through the resignation his strong conviction on RBI’s Independence.
Dr. Patel, working closely with Dr. Rajan, was piloting India’s transition to a new monetary policy regime. Dr. Patel, the senior-most Deputy Governor at the RBI, was the architect of the new monetary policy framework and is working closely with the Cabinet Secretariat and the Finance Ministry to ensure a smooth transition.
No doubt, Dr. Patel had to face a number of challenges ranging from reining in inflation to managing currency volatility but looking to his profound vision about global economy, and extraordinary intellectual power about understanding the financial problems in India, and he had continued a good job by his predecessor Raghuram Rajan in containing inflation and reducing the interest rates. His appointment as the Governor had also come as a relief to International investors. It is nice that Finance Minister Arun Jaitley has focused Patel’s contribution and said that “the Government acknowledges with a deep sense of appreciation the services rendered by Dr. Urjit Patel to this country both in his capacity as the Governor and the Deputy Governor of the RBI.” He was in service so long in many capacities and it would have done the country well if he had continued for a few months more.
Being the man who has seen RBI’s policies and framework, it was expected that his decisions regarding interest rates, monetary policy, cleaning the NPAs of banks, etc., will be balanced keeping in mind the circumstances prevailing from time to time but somehow with pressure from everywhere he could not deliver.
Even as the Deputy Governor of RBI, Patel an abrasive personality, had played a vital role in developing the new monetary policy framework that has focused on reigning in inflation and has imparted stability to the currency.
The changes he helped impel are considered to be among the most momentous monetary policy reforms.
He understands the circumstance very well as he is a fantastic professional, competent and would have been able to deliver but he navigated India’s tricky political scene. What people expect is that besides controlling inflation, Dr. Patel would have followed through on the efforts to clean up banks’ bad loans to support the investments needed and to keep our country as one of the world’s fastest-growing economies.
(The views expressed by the author in the article are his/her own.)