December 9 began as a traditional day for North Block Mandarin, with questions about the Treasury being answered in court. But for keen observers of the economy and financial markets, the big issue of the day wasn’t stars or no stars. It revolved around the Governorship of the Reserve Bank of India (RBI). Incumbent Shaktikanta Das, in his sixth year at the RBI, has just launched a monetary policy that has disappointed the government, which favors interest rate cuts, especially after GDP growth fell to just 5.4% in the July-September period. Ta.
Mr. Das, whose term expires on December 10, said that the balance between growth and inflation is out of balance, but maintained that continued high inflation would also have a negative impact on consumption and growth. By Monday, reporters who had been running stories about a further extension for Mr. Das changed course in the absence of an official communiqué and floated the names of senior bureaucrats who could replace Mr. Das. No one expected that the name would turn out to be Union Revenue Secretary Sanjay Malhotra.
unknown factors
They weren’t the only ones surprised. It is understood that even Mr. Malhotra was informed of his appointment hours before it was announced. The Rajasthan executive, a 1990 batch IAS officer, is not the usual Treasury insider chosen for the top post on Mint Street. Like his predecessors, most of these appointees were in charge of departments such as economic affairs or held the role of finance secretary, like the late RN Malhotra, the 17th central bank governor.
Mr. Malhotra, who has lived almost all his life in northern India, graduated in computer engineering from Kanpur Institute of Technology and earned a master’s degree in public policy from Princeton University. His new role will see him based in Mumbai, India’s financial market capital, for at least three years.
“Malhotra’s views on current economic issues are not well known, so he is a relatively unknown figure from that perspective,” economists at Nomura Securities said. Others echoed this sentiment, saying: “I don’t know how he feels about growth and inflation, but if the government elects him at this juncture, I think it would be a good idea to push for a faster and bigger cycle of rate cuts.” It could be made compulsory,” he said.
Calm speaking style, curious personality
A cricket and coffee enthusiast, Malhotra is one of the most affable, soft-spoken yet serious civil servants, known not only for his clear answers to questions but also for his inquisitive nature. When interacting with the media, after the questions have been asked and dusted off, time permitting we may extend the chat over a coffee board beer to gather ground-level feedback on issues and perceptions during the round. did.
Governor Malhotra made it clear on his first day in office that he is not biased towards either growth or inflation, saying he does not like to take shots from the first ball of a match. But he said he looked to four policy pillars that were important to the people: growth, stability, certainty and trust, and promised to “do our best in the public interest” once he had a clear understanding of his pitch.
Malhotra may be a mystery to Mint Street watchers, but he is something of an authority on banking and financial sector reforms, having previously served as secretary of the Department of Financial Services and as a director of the central bank. Moreover, his revenue role presumably oversees not only the direct flow of taxes from businesses and households, but also trends in trade in goods and services, which can only be seen in detail, such as GST, customs duties, and excise taxes. It is believed to offer a unique perspective on economic growth and consumption impulses. Trends in consumption tax will become clear. It’s no surprise, then, that the Center’s revenue calculations (which rely on growth assumptions) that he worked on in recent budgets were largely spot on.
Malhotra knows more about the economic landscape than many people realize, and in his new term, where constant communication will play a key role, the world will know that, rate cuts or not. I’m about to try.
issued – December 15, 2024 2:11 AM IST
