India cuts shortlist for new RBI chief to four

Reuters: The government has narrowed its list of candidates to become the next governor of the Reserve Bank of India to four, a senior official told Reuters, as it set in motion the process of naming a new Monetary Policy Committee (MPC).

The moves seek to ensure policy continuity and reassure domestic and global investors after RBI chief Raghuram Rajan shocked markets 10 days ago by announcing he would not seek reappointment in September.

Rajan, 53, had been accorded rock-star status by markets for defusing a currency crisis, lowering inflation and winning parliament’s approval to set up the MPC which will set interest rates.

Yet the former IMF chief economist had come under attack from right wingers in Prime Minister Narendra Modi’s ruling party, with friends and colleagues saying this contributed to his decision to make an early exit.

Modi put down detractors who had cast doubt on Rajan’s loyalty: “Raghuram Rajan’s patriotism is no less than any of ours,” he told Times Now news TV in an interview, saying his experience of working with Rajan had been good.

The list of candidates to replace Rajan has been whittled down to four, the official said: current Deputy Governor Urjit Patel, former deputy governors Rakesh Mohan and Subir Gokarn and State Bank of India Chair Arundhati Bhattacharya.

None has commented, though media have reported Bhattacharya may get a one-year extension in her current job.

Analysts said a lack of transparency over the selection process was a worry, and it would be important to ensure Rajan’s successor is strong enough to uphold the RBI’s autonomy.