A day before he is supposed to take official charge at the helm of the Reserve Bank of India (RBI) Governor, the Governor-designate Sanjay Malhotra said all perspectives have to be taken into account and that he’d strive to do what is “best for the economy”.
“One has to understand the turf, all perspectives and do what’s best for the economy,” Malhotra told reporters outside the Ministry of Finance at North Block in Delhi.
Malhotra will take charge as 26th RBI Governor on Wednesday. The outgoing RBI Governor Shaktikanta Das will demit office this evening.
The Appointments Committee of the Cabinet on Monday gave its nod for the selection of the 56-year-old Malhotra as the 26th RBI Governor with effect from December 11 for a period of three years.
A B.Tech in Computer Science and Engineering from IIT Kanpur in 1989, Malhotra later pursued his Master’s in Public Policy from Princeton University. He’s currently Revenue Secretary in the Ministry of Finance and before this was the Secretary, Department of Financial Services.
As Malhotra steps into his role as the RBI Governor, the growth-inflation balancing act will rank among his top priorities amid concerns in some quarters of the Indian economy having slipped into a cyclical slowdown phase. A near two-year low 5.4 per cent GDP growth rate in July-September has already resulted in the RBI slashing its growth forecast by 60 basis points to 6.6 per cent for FY25. It has, however, maintained a neutral stance for monetary policy amid a continuing prolonged battle to bring down inflation within the range of the mandated medium-term target of 4 +/- 2 per cent.
Malhotra is taking charge at a time when indications of a slowdown in the economy are coming in from multiple quarters — a marked slide in credit growth, flagging consumption demand, especially in urban areas, and continuing softness in states’ and central governments’ capital expenditure.
A prolonged pause in monetary policy has already widened the gulf between the government and the RBI. The outgoing RBI governor Das has tried to resolve some of these concerns raised by the government — whether it involved reducing the high FY25 GDP growth forecast of 7.2 per cent to 6.6 per cent or attempting to address credit slowdown with a 50 basis points cut in Cash Reserve Ratio (CRR) that is aimed at boosting liquidity in the financial system.
However, the perceived delay in cutting the key policy rate has been a matter of difference between the RBI and the government as a high interest rate regime along with other macroprudential measures taken by the RBI such as higher risk weights on unsecured personal loans, a discussion paper on higher provisioning for project loans, and steps for digital lending seem to have had a collective impact in dampening growth.
Aanchal Magazine is Senior Assistant Editor with The Indian Express and reports on the macro economy and fiscal policy, with a special focus on economic science, labour trends, taxation and revenue metrics. With over 13 years of newsroom experience, she has also reported in detail on macroeconomic data such as trends and policy actions related to inflation, GDP growth and fiscal arithmetic. Interested in the history of her homeland, Kashmir, she likes to read about its culture and tradition in her spare time, along with trying to map the journeys of displacement from there. … Read More
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