RBI chief faces tough balancing act

RBI chief faces tough balancing act


Soon after taking over as the Reserves Bank of India Governor a year ago, Mr. Shaktikanta Das decorated his 18th floor office, overlooking the Arabian Sea, with two statues of Lord Jagannath, an incarnation of Vishnu. Revered in Mr. Das’s Odisha state, Jagannath is depicted with round, lidless eyes that are always watching over the welfare of devotees.

Overseeing what was until recently the world’s fastest-growing major economy, Mr. Das has worked tirelessly to restore relations with the government after a bitter public spat led his predecessor, Mr. Urjit Patel, to quit. Colleagues say Mr. Das usually tucks papers under his arms at the end of the work day to continue plugging away from home.

He’s paid a hefty dividend to the Finance Ministry, swung into stimulus mode and eased up on bank lending restrictions — all of which Mr. Patel resisted in the face of government pressure. But there’s still much to do: the economy is losing steam on many fronts, the banking sector remains saddled with one of the worst bad-debt loads and the government’s fiscal targets are slipping.

Insiders say Mr. Das has turned around the mood in the RBI's Mumbai headquarters with an affable, plain-spoken approach. As one official said: 'He listens to everyone and then sticks to his own decision.'

Among the RBI rank and file, the more academically-decorated predecessors of Mr. Patel and Dr. Raghuram Rajan, were considered outsiders due to their long stints in US academia. Long-timers were put offside as in-house talent was often bypassed in senior appointments. Not with Mr. Das: in the job posting for a deputy in-charge of monetary policy, at least 25 years of government experience within India tops the priority list among requirements for the role.

Dr. Rajan and Mr. Patel were contrasting personalities — Dr. Rajan the rockstar of global central banking and Mr. Patel reclusive both inside and outside the bank. Silver-haired Mr. Das strikes a balance. He has his own Twitter account and is more open to the media, iving interviews to local and foreign media including Bloomberg News.

But he hasn’t taken to the global stage in the way Dr. Rajan did, such as when he led criticism of the Federal Reserve in 2014 for not taking into account the spillovers of its policies on emerging markets.

Mr. Das’s communication skills have helped improve the relationship with the government. The two sides no longer spar in public and instead resolve issues internally, Finance Ministry officials said. A recent example being the central bank’s reservations toward the Finance Ministry’s proposal for what would have been India’s first overseas sovereign bond issue. The proposal, which also met with opposition from within the Prime Minister, Mr. Narendra Modi’s own party has been frozen.