Consider All Perspectives and Prioritize the Economy’: RBI Governor-Designate Sanjay Malhotra

Consider All Perspectives and Prioritize the Economy’: RBI Governor-Designate Sanjay Malhotra
Sanjay Malhotra will take over as the 26th RBI Governor on Wednesday. Shaktikanta Das, the outgoing RBI governor, will leave office this evening.
 
A day before taking official charge as Governor of the Reserve Bank of India (RBI), Governor-designate Sanjay Malhotra stated that all viewpoints must be considered and that he will seek to do what is "best for the economy".

"One has to understand the turf, all perspectives, and do what's best for the economy," Malhotra told reporters outside the Ministry of Finance's North Block in Delhi.

Malhotra will take over as the 26th RBI Governor on Wednesday. Shaktikanta Das, the outgoing RBI governor, will leave office this evening.

On Monday, the Cabinet Appointments Committee approved the appointment of the 56-year-old Malhotra as the 26th RBI Governor, effective December 11 for three years. 

Malhotra received a B.Tech in Computer Science and Engineering from IIT Kanpur in 1989 and went on to earn a Master's degree in Public Policy from Princeton University. He is currently the Revenue Secretary at the Ministry of Finance, having previously served as Secretary of the Department of Financial Services. 

As Malhotra takes over as RBI Governor, balancing growth and inflation would be one of his main objectives, given concerns in some quarters that the Indian economy has entered a cyclical slowing phase. A near-two-year low of 5.4% GDP growth rate in July-September has already resulted in the RBI lowering its FY25 growth prediction by 60 basis points to 6.6%. However, it has maintained a neutral monetary policy stance in the face of a long-running battle to keep inflation within the legislated medium-term target range of 4 +/- 2 percent. 

Malhotra takes over at a time when many indicators of an economic recession are emerging – a sharp drop in credit growth, weakening consumption demand, particularly in metropolitan areas, and continued softness in state and central government capital investment.

A lengthy halt in monetary policy has increased the gap between the government and the RBI. The outgoing RBI governor, Das, has attempted to address some of the government's concerns, such as lowering the high FY25 GDP growth forecast of 7.2 percent to 6.6 percent and attempting to address the credit slowdown with a 50 basis point cut in the Cash Reserve Ratio (CRR) aimed at increasing liquidity in the financial system. 

However, the perceived delay in lowering the key policy rate has been a source of contention between the RBI and the government, as a high interest rate regime, combined with other macroprudential measures implemented by the RBI, such as higher risk weights on unsecured personal loans, a discussion paper on higher provisioning for project loans, and steps for digital lending, appear to have had a cumulative impact on slowing growth.