New Delhi: A search committee to screen and choose the deputy governor for Reserve Bank of India, or RBI, is likely to be appointed for the first time, according to people familiar with the development.
V. Leeladhar, one of RBI’s deputy governors, is due to retire end-2008, and if another deputy governor, Rakesh Mohan, is picked to replace current governor Y.V. Reddy, there will be another vacancy.
The changes at the central bank will be accompanied by appointments in other top economic policy-making bodies at a time when economic growth is slowing and inflation is at a 16-year high.
Key post: If deputy governor Rakesh Mohan is promoted, there will be two vacancies to fill. Photograph: Ashesh Shah / Mint
Former RBI governor C. Rangarajan recently stepped down as head of the Prime Minister’s economic advisory council to become a Rajya Sabha member. The chief economic adviser in the finance ministry, Arvind Virmani, is due to retire around the end of the current fiscal year.
Current finance secretary D. Subbarao, who oversees the finance ministry’s economic advisory division, is seen as a contender for the central bank governor’s post along with Mohan.
According to a person familiar with the development, most senior economists in the government such as Virmani, and others such as Suman Berry, head of think tank National Council of Applied Economic Research, are close to retiring.
Most of these economists were persuaded to return to India from overseas assignments around 1991-92 by the then finance minister, Manmohan Singh, said the person who didn’t want to be identified because he isn’t authorized to speak to the press.
Unlike earlier occasions, the government is more open to bringing in younger economists on short-term contracts from the private sector and multilateral institutions, other people familiar with the development said, also on condition of anonymity.
The current adviser to the finance minister, Shubhashis Gangopadhyay, was brought in this year from outside the government. The principal economic adviser in the finance ministry, Jahangir Aziz, was brought in this year from the International Monetary Fund on a short-term basis.
According to these people, Raghuram Rajan, chairman of the Planning Commission’s committee on financial sector reforms and professor at the University of Chicago, could be one of the contenders for a deputy governor’s post if Mohan moves to the corner office.
Rajan’s appointment as head of the panel on financial sector reforms could be a way to gradually prepare him and the system for a policy role, they said.
The other contender is Narendra Jadhav, vice-chancellor of the University of Pune and former RBI chief economist.
While Mohan’s post is that of an economist, Leeladhar’s vacancy will be filled by a commercial banker.
In this case, two front runners are T.S. Narayansami, chairman and managing director of Bank of India, and K.C. Chakrabarty, chairman and managing director of Punjab National Bank.