NEW DELHI: The choice of Urjit Patel as RBI governor was made by PM Narendra Modi himself. Patel was one of the four names on the table during last week’s meeting between the PM and Finance Minister Arun Jaitley.
And Raghuram Rajan would not have got a second term even if he hadn’t opted out of it. The other three contenders for the top job 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.
Senior government officials familiar with the matter told ET it was the PM who chose Patel. The choice had come down to a contest between Patel and Subramanian, these officials said.
Patel got the nod because he was always the PM’s first choice. As for the timing of the announcement, officials said the government leadership always intended to keep a short overlap between the incoming and outgoing RBI governors. Raghuram Rajan’s term ends on September 3 and Patel’s name was announced on August 20 — a 14-day overlap.
“The overlap period between the exit of the previous governor and new appointee should not be more than 15 days so as to not interfere in the working of the central bank,” a senior official said. All officials who spoke to ET for this report did so on the condition they not be identified.
To be sure, a rigorous selection process had been put in place by the Centre to select the new RBI governor. The Financial Sector Regulatory Appointments Search Committee headed by Cabinet Secretary PK Sinha, produced a shortlist of five names last month. Patel’s name figured in the list.