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December 9 began as a routine day for North Block mandarins, with questions pertaining to the Finance Ministry to be answered in the Lok Sabha. But for avid observers of the economy and financial markets, the big question of the day was neither starred nor unstarred. It revolved around the Governorship of the Reserve Bank of India (RBI). The incumbent Shaktikanta Das, in his sixth year at the RBI, had just delivered a monetary policy that disappointed a government rooting for an interest rate cut, particularly after GDP growth slipped to just 5.4% between July and September.
Mr. Das, whose tenure was to expire on December 10, said the growth-inflation balance was off but asserted persistently high inflation also hurt consumption and growth. By Monday, reporters who had been running stories about another extension for him, had changed course in the absence of any official communiqué, floating names of senior bureaucrats who may replace Mr. Das. None had an inkling that name would turn out to be Union Revenue Secretary Sanjay Malhotra.
Unknown factor
They were not the only ones surprised — even Mr. Malhotra is learnt to have been informed just hours before his appointment was made public. The Rajasthan cadre, 1990-batch IAS officer is not the usual Finance Ministry insider picked for the top role at Mint Street. Like his predecessor, most such appointees had handled departments such as Economic Affairs, or held the Finance Secretary’s role, like the late R.N. Malhotra, who was the 17th RBI Governor.
Mr. Malhotra, who has spent almost all his life in North India, is a computer engineering graduate from IIT Kanpur, with a Master’s degree in Public Policy from Princeton University. His new role brings him to the heart of India’s financial markets Mumbai for at least three years.
“Not a whole lot is known about Mr. Malhotra’s views on current economic issues, so he is a relatively unknown figure from that perspective,” economists at Nomura Securities said. Others echoed the sentiment, chiming in with stuff like ‘we don’t know how he feels about growth and inflation but if the government has chosen him at this juncture, he could oblige them with a quicker and bigger rate cut cycle’.
Soft-spoken, inquisitive
A cricket and coffee aficionado, Mr. Malhotra is one of the most affable and soft-spoken, yet no-nonsense officials in service, known not just for his crystal-clear responses to questions, but also for his inquisitiveness. In media interactions, after one’s queries are done and dusted and if time permits, he would extend the chat over a cup of Coffee Board brew to glean some ground-level feedback on issues and perceptions doing the rounds.
On his Day One in office, Governor Malhotra revealed no bias towards either growth or inflation, saying he does not like to start playing his shots from the first ball of a match. But he promised to “put the best foot forward in public interest” once he gets a clear sense of the pitch, with an eye on the four policy pillars that mattered for people — growth, stability, certainty and trust, he noted.
Mr. Malhotra may be a mystery for Mint Street watchers, but having served as the Department of Financial Services Secretary, he has been on the central bank’s board, and is an authority of sorts on banking and financial sector reforms. Moreover, his Revenue role probably affords him a unique vantage point of the economy’s growth and consumption impulses, having overseen not just direct tax flows from corporates and households, but also the trends in goods and services trade that only granular details of GST, Customs and Excise trends can reveal. It is then not for nothing that the Centre’s revenue math (that hinges on growth assumptions) he has worked on in recent Budgets, has generally been spot on.
Mr. Malhotra knows a lot more about the economic terrain than many realise, and in his new innings, where constant communication plays an important role, the world is about to find that out — with or without rate cuts.
Published – December 15, 2024 02:11 am IST
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Sanjay Malhotra | The new boss at Mint Street
