India’s central bank chief faces tough balancing act

Bloomberg

Soon after taking over as India’s central bank governor almost a year ago, Shaktikanta Das decorated his 18th floor office overlooking the Arabian Sea with two statues of Lord Jagannath, a form of the Hindu god Vishnu.
Revered in Das’s native Odisha state, Jagannath is depicted with round, lidless eyes that are always watching over the welfare of devotees. It’s an appropriate adornment.
Das, overseeing what was until recently the world’s fastest-growing major economy, has worked tirelessly to restore relations with the government after a bitter public spat led his predecessor Urjit Patel to quit. Colleagues say Das usually tucks papers under his arms at the end of the work day to continue plugging away from home.
He’s paid a hefty dividend to the finance ministry, swung into stimulus mode and eased up on bank lending restrictions — all of which Patel resisted in the face of government pressure. But there’s still much to do: the economy is losing steam on many fronts, the banking sector remains saddled with one of the world’s worst bad-debt loads and the government’s fiscal targets are slipping by the day.
Insiders say Das has turned around the mood in the bank’s Mumbai headquarters with an affable, plain-spoken approach. As one official said: He listens to everyone and then sticks to his own decision.
Among the RBI rank and file, the more academically-decorated predecessors of Patel and Raghuram Rajan were considered outsiders due to their long stints in American academia. Long-timers were put offside as in-house talent was often bypassed in senior appointments. Not with Das: in the job posting for a deputy in-charge of monetary policy, at least 25 years of government experience within India tops the priority list among requirements for the role.
Rajan and Patel were contrasting personalities — Rajan the rockstar of global central banking and Patel reclusive both inside and outside the bank. Silver-haired Das strikes a balance.
He has his own Twitter account and is more open to the media, giving interviews to local and foreign media including Bloomberg News. But he hasn’t taken to the global stage in the way Rajan did, such as when he led criticism of the Federal Reserve in 2014 for not taking into account the spillovers of its policies on emerging markets.
Das’s communication skills have helped improve the relationship with the government. The two sides no longer spar in public and instead resolve issues internally, finance ministry officials said.
A recent example being the central bank’s reservations towards the finance ministry’s proposal for what would have been India’s first overseas sovereign bond issue.
The proposal, which also met with opposition from within Prime Minister Narendra Modi’s own party, has been frozen.