- Tuesday, April 30, 2024
By: Shubham Ghosh
INDIA has decided to extend the tenure of Shaktikanta Das, the governor of its central bank, for three more years or until further notice, earning applause from the market and economists.
Under Das, 64, the Reserve Bank of India (RBI) has slashed key interest rates to record lows and infused big rupee liquidity into the banking system to give relief to the economy hit by the Covid-19 pandemic.
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The Narendra Modi cabinet’s appointments committee approved the decision to re-appoint Das late on Thursday (28). Das has been holding the post since December 2018. Prior to that, he was the secretary of the department of economic affairs in the Indian finance ministry.
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While the extension that Das got is longer than the general norm of two years in the last two decades, but analysts felt he got a longer extension because of the economic situation and the work he has done in almost three years, Reuters reported.
Barclays economist Rahul Bajoria said the extension is a sign of the Modi government’s “continued trust” on Das who hails from Bhubaneswar, Odisha.
“Under Governor Das, the central bank has done the heavy lifting to support the economy through the COVID crisis, with fiscal policy playing a supportive role,” Bajoria told Reuters.
“We also view the governor’s reappointment as a vote of confidence in the RBI’s policy stance.”
The RBI has played an important role in ensuring the Modi government’s massive market-borrowing programme to support the economy during the pandemic.
With the markets preparing for reversal of the ultra-loose monetary stance, traders want a stable leadership of the RBI which has taken a more consultative approach with markets under Das, who has focused on boosting transparency.
“We continue to expect the RBI to pursue a relatively dovish stance while it focuses on growth, amid a more flexible inflation-targeting regime that has evolved under Governor Das,” Bajoria added.
