Shaktikanta Das, who was named Reserve Bank of India (RBI) governor by the government after Urjit Patel's shock resignation on Monday, was widely perceived to be a contender for the top job at the RBI after the exit of former governor Raghuram Rajan in 2016. He finally has got the big job.

Maybe it was destined as the following incident shows: Das is the signatory to the new Rs 1 note. The signatories are usually finance secretaries (other notes are signed by RBI governors) and the government, in a first, allowed Das, then the economic affairs secretary, to sign the note.

Das’s appointment is for three years. It is unusual for a government to appoint a retired bureaucrat though Das, a former finance secretary, maintains a busy schedule. He is member of the federal finance commission, and one of India’s serving G20 representatives.

A seasoned bureaucrat, he has big shoes to fill and plenty of challenges to deal with from the word go.

Firstly, it remains to be seen how the financial markets will receive his appointment. Patel's exit followed a policy tussle with the government and sent tremors through financial markets on Tuesday, though shares recovered later, and investors were keen to see the government quickly name a credible replacement.

Both foreign and domestic investors say any openly political appointee with little macro-economic experience, would not sit well in equity, currency and debt markets that have already sold-off following setbacks suffered by Prime Minister Narendra Modi's Bharatiya Janata Party in state elections this week.

Investors worry the government will use the central bank to do its short-term bidding to boost the economy for political reasons, with a general election due by May, without fully considering the long-term consequences for inflation and financial stability.

Investor Worries

Those fears are not entirely unfounded. Das is seen as close to the government and was touted by government officials as Patel’s successor almost immediately.

He was the face of one of the Narendra Modi government’s most controversial policies — the abolition and replacement of high-value bank notes in an attempt to crack down on black money. As the most visible and vocal bureaucrat at the time, Das often came under fire.

On the first anniversary of demonetisation, he tweeted: “Significant gains for the economy. Great memories of this day last year.”

Das, 61, previously served on the central bank's board.

Last year, Das criticised the methodology of global rating agencies and sought a sovereign rating upgrade. Das has worked extensively in the budget division under both Modi's government and the previous coalition led by the Congress.

He will have to answer questions before a panel of MPs on various aspects of demonetisation, including the counting of notes that returned to the system.

Urjit Patel in his capacity as RBI governor was due to appear before the panel.

The Supporting Voices

Still, Das is not without supporters. Ambit Capital's Ashok Wadhwa told CNBC-TV18 that Das is one of the best people for the job in the current situation of the economy.

"This is an excellent choice, he has all the right credentials which are really suited for the job and this is an excellent choice. I think his past credentials, past experience will ensure that there is compatibility with the government and ministry of finance," Nilesh Shah, MD and CEO, Envision Capital told CNBC-TV18.

Das holds a Master's Degree from St Stephen's College, Delhi University. He has worked closely with the Tamil Nadu government and has served as the special commissioner and commissioner of revenue administration for the Tamil Nadu government. He speaks good Tamil.

Prior to his tenure in the various ministries, Das served as a non-executive director at Indian Bank from December 9, 2009 to December 5, 2012 and was the director of Oil and Natural Gas Corporation (ONGC) and then the director at Life Insurance Corporation (LIC).

First Published:Dec 11, 2018 7:24 PM IST