Shaktikanta Das's Term As RBI Chief Nears End: Extension Or Farewell? Experts Weigh In

As Shaktikanta Das’s six-year term as Governor of the Reserve Bank of India (RBI) approaches its end on December 10, uncertainty over his future is adding complexity to interest rate expectations. With less than a month remaining, there is no official word on whether Das, 67, will be granted an extension or replaced.The final decision lies with the Appointments Committee of the Cabinet, comprising Prime Minister Narendra Modi and Home Affairs Minister Amit Shah. So far, the government and RBI have remained silent on the matter, while Das has publicly avoided addressing his future.

Das has been instrumental in steering the Indian economy through major challenges, including the pandemic, and speculation suggests he may receive an extension. No other significant contenders for the role have surfaced, and analysts believe the continuity of Das’s leadership could be crucial during this period of economic uncertainty.His deputy in charge of monetary policy, Michael Patra, is also nearing the end of his term in January. The government recently advertised Patra’s position and appointed three new members to the Monetary Policy Committee (MPC), which determines interest rates.

Economists agree that any change in the RBI’s leadership could influence interest rate decisions. Das has been relatively hawkish on inflation, keeping rates steady for nearly two years despite external pressures for easing. While the MPC’s decisions are collective, a new governor may bring different priorities and strategies.“The MPC decision is a cumulative decision” when it comes to interest rates, said Sakshi Gupta, economist at HDFC Bank Ltd. “But the shape and form of MPC will perhaps have a bearing on RBI’s views on what is happening to growth and whether they can look through some of the food inflationary pressures that we are seeing.”Under Das, the RBI has focused on stabilising the rupee and building foreign exchange reserves, now the world’s fourth-largest at $700 billion. His tenure has been marked by a collaborative approach with the government, unlike his predecessors, Urjit Patel and Raghuram Rajan, who had contentious relationships with policymakers.Das’s pragmatic leadership has earned him widespread praise. “Das has done an incredible job,” said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank. If granted another extension, he would become the longest-serving RBI governor since Benegal Rama Rau in the 1950s.(With Inputs From Bloomberg)