An open letter to the RBI governor

You have come at a time when the growth-inflation dynamics are changing and the ₹ is under pressure

- TAMAL BANDYOPADHYAY

Dear Mr Malhotra, Congratulations. Welcome to the helm of the central bank of the world's fifth-largest economy.

You didn't throw your hat in the ring. Your predecessor at the Reserve Bank of India, Shaktikanta Das, would probably have felt the same way Bimal Jalan had felt about the choice of Y V Reddy as his successor - a signal of continuity and change. Continuity, since Reddy had been a deputy governor; and change, because, as a governor, he would do new things.

In this case, continuity, since one revenue secretary has replaced another. And change, since you will explore new ideas.

Of course, Das was a former revenue secretary when he moved to the RBI; your passage from the Raisina Hill to Mint Road is direct. But there is no surprise here. In September 2008, D Subbarao parachuted into the RBI headquarters from New Delhi. Like Subbarao, you too, are an Indian Administrative Service topper. Besides, both of you have studied at the Indian Institute of Technology Kanpur, and gone to US universities (you, to Princeton University and Subbarao, to Massachusetts Institute of Technology).

The similarities end here. The task ahead of you is very different from Subbarao's. Subbarao took over the mantle at the RBI a little over a week before the collapse of US investment bank, Lehman Brothers Holdings, which led to the transatlantic financial crisis.

Your challenge is different. You have come at a time when the growth-inflation dynamics are changing and the rupee is under pressure.

Looking back, in the post-liberalization era, different governors have had different tasks cut out for them. Das had a very tough assignment. An economy dreaming of soaring to $5 trillion sank into a technical recession as the Covid-19 pandemic hit the world. Das ratcheted the interest rate down to a historic low, flooded the system with money, and tried to tackle the unprecedented crisis with measures that were at times unconventional.