Demonetisation lessons may come in handy for new RBI governor : 12-12-2018

If there is a calming presence needed to simmer down the tension between the Reserve Bank of India and the government, then veteran bureaucrat Shaktikanta Das makes the cut and more as he is well clued into the functioning of both sides.

That virtue was well demonstrated in the turbulent months of demonetisation, when as economic affairs secretary Das fought multiple fires at the same time.

Frequent tweets, TV interviews and almost daily briefings ensured that communication lines between the people and the government remained open as challenges mounted. Even as he became the public face of demonetisation, behind the scenes he marshalled the bureaucracy and kept open channels with the RBI to ensure currency shortages did not hurt the economy and to lessen hardship to the people.

He will need lot of those qualities to walk the tightrope of the government’s expectations from the central bank and ensuring the RBI’s autonomy is protected, as the organisation undergoes some transformation.

He is unlikely to shy away from changes for sure, having overseen multiple reforms under his watch at North Block where he spent many years. Insolvency law, FDI and budget reforms, National Infrastructure Investment Fund, fiscal framework, ease of doing business initiatives and agreements to trace foreign black money are some of the big projects that bear his signature.

A retired IAS officer of the Tamil Nadu cadre, Das oversaw India’s biggest budget reform, the recasting of accounts and early presentation of the annual budget on February 1. The railways budget was abolished and its accounts integrated with the general budget.

The Insolvency and Bankruptcy Code, one that promises to address NPA issues that have dogged the Indian economy for many years, was worked out by the Department of Economic Affairs. The law is helping the RBI speed up the resolution of failed businesses.

Most importantly, he has been a stakeholder in the changes at the RBI. He was involved in the last big reform at the RBI when the central bank shifted to a monetary policy committee (MPC) model for setting interest rates. Interest rates are now decided by a sixmember committee consisting of three members from the RBI and three independent experts appointed by the government.

Over the years, he has had multifarious discussions with the RBI. As joint secretary budget, he was in regular interaction with the RBI for the government’s borrowing programme. He was also part of the committee headed by Shyamala Gopinath on small savings that laid down the framework for interest rate regime for these instruments.

His name was considered even at the time of appointment of Urjit Patel as RBI governor, but he had to wait before the government brought him back. Six months after he retired, the government appointed him a member of the 15th Finance Commission in November 2017. At the same time, he was also appointed Sherpa for the G20.

Source : Financial Express