As Reserve Bank of India (RBI) governor, Urjit Patel was routinely lambasted for getting his timings wrong. His decisions to change the interest rate, slap harsh rules on banks, and tossing strange inflation forecasts were widely believed as mistimed and misplaced. Indeed, till yesterday, Patel was perceived as the weakest governor in the history of RBI.Some of that would now change. On Monday evening, Patel displayed, even if unwittingly, an immaculate sense of timing: his sudden resignation would embarrass the government, which had handpicked Patel for a job many thought he did not deserve. And, by showing uncharacteristic firmness to throw away that job which was fast becoming unsustainable, Patel partly eclipsed the other big story of the day: ‘UK court ordering extradition of Vijay Mallya’.It was a day when New Delhi’s victory over Mallya was clouded by the RBI governor’s grim message to step down with immediate effect. With at least a decade of professional life ahead of him, Patel has salvaged his reputation while giving a fitting reply to a government that was belittling the institution he headed.Patel left RBI two days before a crucial board meeting — which may now be called off — where the ‘governance’ of the 83-year-old institution would have come under question. It was part of a new agenda that was being pushed by New Delhi to establish the primacy of the RBI board — a step that could made the central bank board like the board of a corporate house with the governor as the CEO and the central bank balance-sheet as the financial statement of a company.Ain’t Have No ReservesPatel sensed he was losing the battle with New Delhi. He could neither accept (or seen to be accepting) to a change of his role and that of the board’s, nor reach an agreement on who would head the panel that would fix the optimal capital (and reserves) for RBI (with the understanding that the excess could be shared with the government).Some of his predecessors — more flamboyant and outspoken than Patel —had also lost a few battles with New Delhi by quietly succumbing to the whims of ministers. It never made headlines. But Patel, a recluse, who had distanced himself from the media, markets as well as colleagues, received very little support. In a politically surcharged environment, all commentaries on the ‘RBI versus GoI story’ were aimed at either attacking or supporting the government — but rarely backing the governor.Patel, known for his mood swings and impulsive ways, is a little-understood man. Few men with supposedly excellent relations with members of both sides of political divide leave office on such bitter note.As a resident officer in the International Monetary Fund office of New Delhi during the balance of payments (BoP) crisis of the early 1990s, he had occasionally backed India — a gesture that was remembered by many in the Congress, the party that many years later in 2012 granted him Indian citizenship in record time when Patel stepped in as deputy governor of RBI.For RBI, ‘life after Patel’ would clearly depend on the outcome of the elections. If BJP fares well, the Centre, which has gone too far in making its positions clear about RBI, would try to push through the ‘governance’ changes. The government may pick a bureaucrat to make things ‘easier’ — though in the past not all civil servants have toed the Delhi line after becoming the governor.Full of Beans, Finally?History shows that the 18th floor of RBI has the power to change a person. Delhi may temporarily change tack, but it may not be easy to find a person who is accepted by the government as well as admired by the world as a governor.Patel never realised that a Governor cannot cut a deal with men who hired him. He was naive enough to believe that a government that begins with DeMo will stop at DeMo. Perhaps, his stint in Mint Street will make him wiser.As a student in Oxford, Patel’s favourite British sitcom was Blackadder, which in its Tudor-era incarnation had the prince constantly scheming to seize the crown from his father. The fictitious bank in the Rowan ‘Mr Bean’ Atkinsonstarring comedy, carried the motto ‘Banking with a smile and a stab’. Having made a stab, a relaxed Patel can now wear his faint, customary smile.DISCLAIMER : Views expressed above are the author's own.
from Economic Times https://ift.tt/2QmT7vI
