Mumbai: Subir Gokarn, Asia-Pacific chief economist of global rating agency Standard and Poor’s (S&P), seems to have emerged the front-runner for a deputy governor’s post in the Indian central bank that has been lying vacant since mid-June after Rakesh Mohan quit months ahead of his retirement.
According to two persons familiar with the development, Gokarn’s name tops the list of candidates approved by the search committee, headed by Reserve Bank of India (RBI) governor D. Subbarao, and sent to the finance ministry. The appointment needs the approval of the Prime Minister’s Office.
“Unless things change at the last moment, it’s fairly certain that Gokarn will get the job. The announcement is expected soon,” said one of the persons. He did not want to be identified given the sensitivity of the issue.
If Gokarn, 49, gets the job, he will be one of the youngest deputy governors at RBI in recent times. R.K. Hazari, who was a deputy governor between 1969 and 1977, is the youngest in RBI’s history and was in his late 30s when he was appointed to the post.
Most preferred: S&P’s Asia-Pacific chief economist Subir Gokarn. Madhu Kapparath / Mint
Gokarn’s appointment, if it happens, will also mark a radical shift in RBI’s approach. It will be the first time the bank is looking beyond the circle of bureaucrats and “government economists” to fill the post, traditionally reserved for a macroeconomist.
Mohan, who quit in June, had served as a secretary, department of economic affairs, and chief economic adviser to the finance minister. His predecessor Y.V. Reddy, who later became governor, also was a part of the finance ministry.
Apart from Subbarao, the other members of the search panel are Ashok Chawla, finance secretary, former State Bank of India chairman Janki Ballabh and former RBI deputy governor Vepa Kamesam.
Even though these members were involved in preparing the list of prospective candidates at the initial stage, Subbarao alone interacted with the chosen few.
JPMorgan’s chief economist in India Jahangir Aziz was one of those he met. Aziz, according to one of the two people cited in the first instance, expressed his inability to take up the job soon because of his other commitments.
Arvind Virmani, the chief economic adviser in the finance ministry, is also being considered, but he may not make the cut because he retired on 30 June and is currently on an extension. Technically, a retired person cannot be considered for the job.
There is yet another person who was interviewed by the governor for the job, but Mint could not ascertain his identity. Mint reached out to both Gokarn and Aziz, but neither of them was willing to talk about the appointment.
According to the two people, after the initial shortlisting by the search panel, Subbarao formally met the candidates in mid-July and continued interacting with them over phone till early this week, before the final list was made.
Gokarn assumed his current position in August 2007, and is responsible for shaping S&P’s macroeconomic views in this region and expanding its research and commentary, after being chief economist of Crisil Ltd, an S&P company, for at least five years. He was the chief economist at the National Council of Applied Economic Research, New Delhi, and associate professor at the Indira Gandhi Institute of Development Research, Mumbai.
Educated at St Xavier’s College, Mumbai, and the Delhi School of Economics, Gokarn received his PhD in economics at Case Western Reserve University at Cleveland in Ohio, the US. His doctoral dissertation was on the impact of capital market liberalization on industrial performance in South Korea.
Aziz was previously the principal economic adviser in the ministry of finance. He was involved in the Indian government’s economic policy-making process, especially in the areas of monetary policy and financial sector reforms. Prior to this position, he was with the International Monetary Fund, where he spent 14 years mostly in the Asia-Pacific department. Aziz has a PhD in economics from the University of Minnesota, and graduate degrees from Kolkata’s St Xavier’s College and Delhi’s Jawaharlal Nehru University,
A recipient of the Padma Bhushan, the third highest civilian honour in India, Virmani is a PhD in economics from Harvard University. He has served as director and chief executive officer of economic think tank Indian Council for Research on International Economic Relations, and has been a senior economic adviser in the finance ministry and adviser (development policy) in the Planning Commission.
Mohan quit in June, eight months ahead of his retirement as deputy governor, to take up an assignment at the Stanford Center for International Development at Stanford University as a distinguished consulting professor.
The first deputy governor born after India’s independence in 1947, Mohan came to RBI’s headquarters on Mint Road in September 2002, but before finishing his three-year term, he moved back to North Block as secretary, department of economic affairs, in October 2004. He came back to RBI in July 2005.
Mohan was in charge of monetary policy, financial markets, economic research and statistics, among others. He also headed the committee on financial sector assessment that conducted a stress test on the Indian financial system.
After he left, Subbarao kept most of these critical portfolios with himself—till the time a fourth deputy governor came on board.
Traditionally, RBI has four deputy governors. Among the existing three, Usha Thorat and Shyamala Gopinath belong to RBI cadre. The third one, K.C. Chakrabarty, took over as deputy governor in June, six months after V. Leeladhar retired. This time around, the government seems to be taking just around half the time to appoint Mohan’s successor.