<b>A K Bhattacharya:</b> Continuity is the best policy

As the deputy governor, Urjit R Patel's biggest contribution has changed the way monetary policy is framed in India. He chaired the experts group that put in place the framework of the monetary policy committee

There are very few deputy governors of the Reserve Bank of India, who have directly moved up to become the governor of the apex bank without a break.

James Braid Taylor was the deputy governor from April 1935 to June 1937 before succeeding RBI's first governor, Osborne A Smith, on July 1, 1937, and staying in that job for more than five years. Chintaman D Deshmukh, too, worked as the deputy governor from December 1941 to August 1943 before being elevated as the governor of the RBI from August 11, 1943 - a tenure that again lasted for more than five years.
 

More than 70 years later, something similar will take place on September 4, 2016. Urjit R Patel was appointed by the Manmohan Singh government as the deputy governor in January 2013 for a three-year term. In January 2016, the Narendra Modi government gave him a fresh term of three years as the deputy governor. And now the same government is moving him up as the governor with a term of three years, making it the first such instance after Independence.

To be sure, there were two other eminent governors who had also served the RBI as deputy governors before occupying the top position at the RBI, but after a short break. Chakravarthi Rangarajan spent over nine years as the deputy governor from 1982 to 1991 before joining the Planning Commission as one of its members. Rangarajan returned to the RBI as its governor in December 1992.

Similarly, Y Venugopal Reddy spent close to six years as the deputy governor between 1996 and 2002 before moving on to the International Monetary Fund as executive director. But Reddy too came back to the RBI just about a year later to become its governor for a five-year term.

There were three other deputy governors, K G Ambegaonkar, B N Adarkar and Amitava Ghosh, who also occupied the top job at the RBI, though for a very short period of 45 days, 42 days and 20 days, respectively.

Ambegaonkar, an Indian Civil Service officer and a former finance secretary, was the deputy governor from 1955 to 1960. But in January 1957, the then RBI governor Benegal Rama Rau (who still holds the record of the longest tenure in that job) quit over reported differences with the then finance minister, T T Krishnamachari, and the sudden void had to be filled by Ambegaonkar. Once the government found in HVR Iyengar the next governor, Ambegaonkar returned to his earlier position of the deputy governor.

Adarkar had a five-year stint as the deputy governor in May 1970 before becoming an interim governor and paving the way for S Jagannathan to take charge for a full term as the governor.

Similarly, Ghosh was the deputy governor from January 1982 to January 1992. But in between, from January 15 to February 4 of 1985, Ghosh had to step in as the governor to fill the void created by the departure of Manmohan Singh as the governor. Like Ambegaonkar, Ghosh too went back to his position as the deputy governor once R N Malhotra was appointed the next governor.

Neither of these three can be compared with Urjit Patel, who in sharp contrast has been elevated for a clear three-year term as the RBI governor. But like Taylor, Deshmukh, Rangarajan and Reddy, Patel will have the obvious advantages of having worked in the same organisation as the deputy governor before taking on the mantle of the governor. The experience of having worked in the RBI for more than three years and steered the monetary policy department within the apex bank will stand him in good stead.

As the deputy governor, Patel's biggest contribution has changed the way monetary policy is framed in this country. He chaired the experts group that put in place the framework of the monetary policy committee, which the government has largely accepted and made necessary legislative changes. He has also been instrumental in the central bank adopting the consumer price index as the yardstick for measuring inflation and forming its monetary policy stance. Now as the RBI governor, Patel, who loves to keep a low profile, will have to make sure that his ideas work towards the goals that his experts group had sought to achieve.

From his stint as India representative of the International Monetary Fund office in New Delhi in the early 1990s to the governorship of the country's central bank, Patel has traversed a long distance and it has been a successful journey. His three-year tenure as RBI governor will be significant for another reason. It will end in early September 2019, a few months after the next general elections and the formation of a new government. A decision on his continuation or identifying a successor will thus be taken by a newly elected government, much after the elections when such decisions can be a victim of avoidable politics. Nothing could have been more welcome and prudent from the governance point of view.