Days Ahead for the New RBI Governor, Sanjay Malhotra
Sanjay Malhotra has become the new RBI governor, making him the 26th Governor of India’s central bank after Shaktikanta Das. A Princeton-educated career civil servant has been defined as someone who is very detail-oriented with the capacity to work for long hours. However, his appointment to the Chair by the Government of India, that is Bharat, comes at a time when there are a couple of challenges that need to be corrected.
There are several reports that have put forward their perspectives. This article attempts to compile all of them for a quick reference.
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India’s growth rate was last reported to be around 5.7% with a Consumer Price Index of 6.2%. It missed the target in terms of growth and inflation is far from the target of 4%. Some might call it an aggressive milestone given the conditions that prevail but the Reserve Bank of India, that is RBI, is confident about it. If anything, Sanjay Malhotra has committed to take up the huge responsibility and reverse the ongoing slowdown. This has triggered two projections.
One pertains to the targeted growth rate of 6.8% in the third quarter and 7.2% in the fourth quarter.
Second projection is about announcing a rate cut - which could be tricky because the RBI has kept it unchanged for a long time.
It was earlier speculated that a rate cut would happen only in April next year, that is 2025. There is now a hint of slashing the rate by February 2025. There is little information about the size of the rate cut. It could hover between the range of 25 bps to 50 bps, with a higher possibility of bringing down rates by 25 bps.
A rate cut would fuel borrowing power which would eventually translate to higher investment in different sectors. This would facilitate growth - thereby, helping India achieve the projected growth target.
The new RBI Governor has summarized his goals in two points:
Aiming to grow the economy; and,
Generation of revenue.
Experts have not tagged him with any title and are only waiting for him to spend some time in the RBI office. A couple of months later may earn him either of the two tags which are dove or hawk.
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As for the rate cut, Nirmala Sitharaman and Piyush Goyal have already pitched for some comfort to boost India’s economic growth. Shaktikanta Das didn’t take it into account. Possibilities are that the new RBI Governor would have a different stand. He has already clarified that his move would prioritize public interest while simultaneously protecting the golden goose.
The 56-year-old is known for being a hard taskmaster. The appointment of Sanjay Malhotra, many believe, as the new RBI Governor was like a last-minute surprise. Malhotra often shies away from coming under the limelight to maintain a low profile in the public arena. He is credited with expanding the adoption of a more simplified tax regime. Sanjay is also associated with being a key driver behind the 28% online gaming tax.
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