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India Gets A New Central Bank Governor: Winds of Change?

by Cameron Branngan

The new Governor of the Central Bank of India, Urjit Patel, is most likely going to have his job cut out for him, according to numerous sources including the WMoption. Fortunately, one thing he will not have troubles with, at least initially, is investor confidence, as his credentials are impeccable both on the academic and professional field. However, while good credentials are certainly a good start, it takes far more than that to make a good and successful head of a central bank, especially in a country such as India.

The Good Shepherd

For one, most of the concerns surrounding him are about his leadership and communication skills. Of course, he made quite a name for himself already, but that was at the head of his own company and the sheer size of the team he is going to be in charge of is gargantuan. In fact, he will have to steer the behemoth that is the 17,000-member team spread across the Indian subcontinent. Just keeping everything organized and coordinated is going to be a task worthy of Heracles.

And yet, this gargantuan undertaking seems to come naturally to the man who served as the deputy governor of the Reserve Bank of India for almost three years with distinction, which all but recommended him for the new, vacant position. His endeavours towards processes which target inflation as well as the panel for monetary policy whose chief assignment was to control the interest rates have been an astounding success, and it is everyone’s hope that he will triumph in his new assignment as well.

In his previous position, Patel had to overcome adversities such as resistance towards any kind of change, but it seems that for the time being changes are as far away from his mind as they can get. Actually, he has gone on record stating that his predecessor’s policies will remain in place. Still, Raghuram Rajan, the previous governor, left Patel with some rather large proverbial shoes to fill, having been praised for his earlier accomplishments. Among other things, he managed to cut the inflation in half as well as navigate India through one of the worst financial crisis the country has ever experienced.

The Lone Wolf

For all his skills and accomplishments, Patel has enjoyed a reputation of a lone wolf during his tenure in the Reserve Bank of India. However, he is now in a situation where the utmost of his skills as a leader, communicator and an organizer are going to be put to the ultimate test. Known for his temperament, Patel will have to keep calm and level-headed, as his image will ultimately reflect on the Central Bank of India as well as the country itself. Needless to say, his old antics will certainly no longer be tolerated.

The man who normally loathes huge crowds and public speeches will now be in a position where the job requirements demand that he keep a busy schedule, full of public meetings, statements and other stressful assignments. While nobody doubts he has the knowledge and skills to be at the helm of such an institution, it is unclear if his own adversities will affect his performance and to what extent.

Conclusion: Between a Rock and a Hard Place

As the new Governor, Patel will be in charge of transforming India’s economy in the ways that have not been seen before, while keeping a stern public image, coordinating the other five members of the new policy committee from the RBI as well as all the heads of state-owned banks in India with problems of their own. We are talking about a $120 billion’s worth in bad loans that must have given Rajan some of the worst headaches in his entire life.

And yet, things are not that bad. For one, Patel is much better connected and received by both government officials and the investors. As the new Governor, Patel will most likely try to maintain good relations with the Indian government and many of his future decisions are expected to be influenced by this fact. On the other hand, he will do what he can to keep the investors happy as well, which should not be too hard considering his education and experience in the private sector.