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RBI Governor Shaktikanta Das silences critics with right monetary policy mix in tough Covid times

Man of the MatchL RBI Governor Shaktikanta Das (Pic credit: Twitter)

When ShaktiKanta Das was appointed governor of the Reserve Bank of India (RBI) in December 2018, many pundits were quick to write volumes about how his coming would mark the end of the Central Bank’s autonomy. He was appointed right after his predecessor Urjit Patel abruptly quit citing interference from the Centre.

Three years have rolled and now Das has been given another three years’ extension. He will now remain at the helm till December 2024.

This time, however, those voices that vehemently criticized him, have remained rather muted.

Also read: India on path of swift recovery: FinMin report

“One of the key achievements of Das is that he has shown that to maintain autonomy you do not have to be at loggerheads all the time,” a former colleague of his who worked with him in the finance ministry told India Narrative.

People who have worked with him said that his inclusive and open minded nature allows him to stand out.

“When he took over the top job at the RBI, many within the Central Bank were suspicious about him especially since at that time RBI and the government had got entangled in a nasty battle. He, many felt, would be the government’s voice,” the person said, adding that his interpersonal skill has helped him in steering the RBI through the most difficult times in recent history.

Das, unlike his predecessors does not hold a Doctorate in Economics—he holds a Master’s Degree in History– has proved that work can be done productively “without brawls.”

His tenure as RBI chief will be marked by the outbreak of the Covid 19 pandemic. 

Das, known to have his eyes focused on economic growth, kept his emphasis on the same even during the pandemic. His emphasis of “accommodative stance” over inflation continues. The RBI even let inflation rise above the 6 per cent level in 2020. But Das maintained that the Central Bank has a “laser focus” on prices and will not allow it to rise beyond a certain level.

Amid unprecedented economic challenges and geopolitical shifts, India’s foreign exchange reserves swelled. When he took over as RBI governor, the forex reserves were at about $450 billion. Today it is $641 billion.

Also read: Will PM Modi rely more on his economic advisory council to lift post-Covid economy?

“RBI had continuously made forex purchases. In FY21, RBI purchased Rs 5.1 trillion worth of forex and its forex reserves swelled by $103.72 billion,” the State Bank of India analysis said.

Das, whose strength lies in open communication—he is the first RBI governor who is active on social media including the Twitter—has been repeatedly assuring businesses that the Central Bank is “battle-ready” and would do whatever it takes to keep up the momentum in the economy. 

While a few big-ticket frauds including the Punjab & Maharashtra Co-operative (PMC) Bank and Yes Bank hit the country under his tenure, his achievement lies in the fact that the Central Bank did not allow these to affect the system and the sentiments.

Analysts also said that his biggest test has been the Covid 19 pandemic.

Das, who as economic affairs secretary carefully steered through the demonetization period, was perceived to be close to the ruling party.

Congress leaders and former Finance Minister P Chidambaram had tweeted, “Government has appointed two persons who vocally supported demonetization to two key posts. What does it say about the Modi government? Is government telling the people of the country ‘we don’t care what you think, we will do exactly as we please’?” However, it was not just the Congress. Even BJP leader Subramanian Swamy attacked Das.

“No one can say that RBI has lost its autonomy or that the institution has weakened under Das,” the colleague said.