Raghuram Rajan v/s Urjit Patel – Similarities and Differences
Raghuram Rajan’s departure as the Reserve Bank of India Governor was a shocker for India and raised confusion and doubts on the intentions of political play but the stepping in of the new chief is even more of a buzz. Patel is Kenyan born and holds degrees from London School of Economics, University of Oxford and Yale University.
Patel defeated the other contenders for the post that included ex-governor Rakesh Mohan, ex-deputy Subir Gokarn and State Bank of India chairperson Arundhati Bhattacharya. It is worth noting that Patel worked at the International Monetary Fund for five years and was appointed deputy governor of Reserve Bank of India in 2013.
Similarities1. Continuity: Only if we could overlook the outward charisma and the celebrity status that has been given to Raghuram Rajan and rightfully so, we could see that Patel is going to be all about the continuity of the same policies that Rajan initiated. His insight into fighting inflation is shared wholeheartedly by the successor who is most likely to continue the good work. That should be all that matters.
2. Foreign degrees: Rajan’s suspension came with accusations of him being the man who doesn’t know much of Indian economy and that his foreign degrees and work experiences have made him less sensible of India’s need of the hour. It would be interesting to see how haters are going to handle the same credentials of the new chief.
3. Similar stand: It is being said that Patel had a great role in designing the inflation-targeting regime which makes it easier to understand that they are not so different after all and that there is hope that the new governor will take a stance against all the odds that lie ahead. It will be interesting to see how he manages to cut down inflation rate which is at 6% but the government is not going to be happy until it is down to 4%.
4. Similar approach: His approach on RBI’s monetary policy from focus of wholesale price (WPI inflation) to consumer price (CPI inflation) has been lauded by Raghuram Rajan which shows they are on the same page. He will be seen continuing with the smart decisions that witnessed alongside Rajan when he was the deputy governor, taking over responsibilities when the former was outside India.
Differences:1. Rock star v/s Taciturn: Rajan has always been popular for his eloquence and charisma that he aptly used to stress upon the economical need of the country. His not so friendly ties with the government and open battles make him the rock star RBI governor while the new guy is a tamed low-key banker who would do better than to risk losing the favor of the ruling government.
2. The torch bearer v/s The follower: It is not being predicted that Patel will try to divert or change the monetary policies that were initiated by Rajan. It is more likely that they will be kept intact. What makes these two gentlemen differ is their contribution. While Rajan will always be the torch bearer who took the bold steps to bring in transformation, Patel will always be the follower who kept up the good work started by Rajan.
3. Hawk v/s Dove: Economic history of India shall always remember Raghuram Rajan as the hawk who took the courage to stand for what everyone else doubted. He is the man who took the big risk upon his reputation while implementing the policies. Patel, though respected by everyone, is the silent dove, a man of few words.
4. Rewarding silence: Patel’s silence could reward him in times to come if his appointment is apolitical and he manages to keep his peace with those in power. His silence and taciturn could go a long way in giving him a rather more secure job promise. He won’t be doing all the talking and his focus will be on his research.
5. Swamy favors: Unlike Raghuram Rajan, Urjit Patel became Subramanian Swamy’s instant favorite. The famous clash between Rajan and Swamy was something to watch out for and here Patel is already in his good book which is good for him in more than one ways.
Whether Urjit Patel will keep up his own ideas and ideals that he maintained alongside Rajan will only be known when the time comes. It has been known that apparently the monetary policy and inflation hawk ideas were his own. It would be interesting to see what wins – morals or favoritism.
