Same Textbook, but

Different Lessons
By Shreeya Jain
Closing off months of speculation, the government on Saturday, 20th August
2016 finally announced Dr Urjit R Patel as the 24th governor of the Reserved
Bank of India.
Patel was not a unanimous choice however. He was one of the four names on
the table during a meeting between the PM Narendra Modi and the Finance
Minister Arun Jaitley. The other four prospects for the highest post at RBI
were Chief Economic Adviser Arvind Subramanian, former CEA and currently
World Bank's Chief Economist Kaushik Basu and former RBI deputy governor
and now India's representative at IMF Subir Gokarn. [1]
A senior government official privy to the deliberations of the committee said
the choice had come down to a contest between Patel and Subramanian but
it was Patel who finally got the nod because he was always the PMs first
choice. "Patels appointment signifies continuity... He has worked in the
government as opposed to Subramanian who is too new to the system", said
an official who was involved in the rigorous selection process.
Patel, 52 and currently a deputy governor at RBI, will take over from the
high-profile Rajan after the latters term ends in September this year.
"Appointment of Urjit Patel comes as a welcome move,'' says Arundhati
Bhattacharya, chairman of State Bank of India. [2] He has worked closely with
Rajan and is often seen as his close lieutenant. This adds to the conviction
that Patel, as RBI governor, will ensure continuity of Rajans policies.
As it is, Rajan and Patel have multitudinous similarities, both in their
ideologies as well as their economic and financial policies. Inflation and fiscal
hawk- check, global academic credentials- check, worked with the
government- check, has been an IMF economist- check. Patel is known to be
someone, who like Rajan is committed to RBIs biggest goal of keeping prices
in check. Since the last three and a half years, he has been running the
central banks monetary policy department and has been working closely
with Rajan during this stint. Incidentally, it is also Patel who is the man
behind RBIs new Monetary Policy Committee (MPC) framework and inflation
targeting approach. Unbeknown to many, a paper coauthored by Patel is
behind the 3% fiscal deficit target that the government established a few
years ago and is now under revision. [3] Additionally, it appears that both
Patel and Rajan are knuckled down on setting up an effective monetary
transmission policy. This is something that Rajan has been stressing on time
and again, especially with respect to rate cut transmission by banks.

While Rajan and Patel share a similar economic ideology, there are matters
where they are as different as chalk and cheese. The difference begins with
their personalities and their style of communication and functioning.
Communication has been honed to a fine art by todays economists, and
Rajan is a master at it. Rajans speeches are conversational and mostly
bereft of jargon as theyre targeted at the layperson. Contrary to this, Patel
speaks the experts lingo. In his three years tenure as a RBI Deputy
Governor, Patel has given only two speeches as opposed to Rajan who lets
loose a torrent of words and views at us. Some believe that as a RBI
governor, Patel would need to communicate more while many others mull
over the notion that Patels low-key style will be useful in rebuilding ties with
the government.
Patel has the potential to create a difference, a potential recognized by
many. Infosys founder and IT doyen N R Narayana Murthy, who had earlier
pitched for a second term for Rajan, said, Patel is the right man to succeed
Raghuram Rajan. Who better than him to see what needs to be done to
stimulate growth and contain inflation?" [4] Regardless of all this, one thing is
certain, Patels job would by no means be easy, especially given the star
status and the global credibility that his predecessor Rajan managed to
attain. We can only hope that Patel steers the economy in the right direction,
taking it to still newer highs.