The reappointment of RBI governor Shaktikanta Das by three years—which would make him the second-longest serving governor in the regulator’s history if he were to complete the term— has drawn mixed responses. While a section of the people has welcomed the extension, given he managed to smoothly sail through a tumultuous period—marked by post-demonetisation economic slowdown and pandemic induced recession—of central bank policymaking, others have called it a quid pro quo for Das totally toeing the government line.
Ever since Das assumed office in December 2018, the RBI has reduced policy rates by 250 basis points. His two predecessors—Raghuram Rajan and Urjit Patel—were believed to be a little too conservative (for the government’s liking) when it came to cutting interest rates. The Monetary Policy Committee led by Das has also kept the liquidity tap on for quite some time, making the system flush with enough money that had driven the unexpected ‘bull run’ in Indian stock markets, as well as kept the start-up ecosystem vibrant with funding coming from every nook and cranny. Of course, one cannot cast aspersions on Das for his policies that promoted easy liquidity since it was a worldwide phenomenon. But his biggest contribution was helping the Central government cope with severe fiscal distress, when the RBI made a record payout of Rs 1.76 lakh crore in 2019-20 and Rs 99,000 crore payout in the current financial year. Even in the pandemic year of 2020-21, the RBI paid a dividend of Rs 57,000 crore. Das, unlike his predecessors, adopted a non-adversarial attitude towards the executive, something that comes easy to a seasoned bureaucrat like him. He concurred with the government on an easy monetary policy and managed to bring peace in the relationship between the central bank and the Centre.
While Das can be blamed for compromising the self-righteous standards of the RBI, he did steady the ship that was caught in turbulence, steered himself clear of any unnecessary controversies and quietly performed his duties. Aside from the questions of ethics, one cannot blame the government for rewarding Das with an extension given he has lived up to its expectation.