Speculation is swirling in India’s local media on who will be the next central bank governor after Urjit Patel’s abrupt exit.
There’s no obvious successor yet, and given the cloud under which Patel left — amid a public fight with the government over the Reserve Bank of India’s autonomy — investors are naturally anxious about who will take the helm.
The first step is for Prime Minister Narendra Modi to appoint an interim governor, as has been the practice in the past, with that post likely to go to N. S. Vishwanathan, currently the most senior of the four deputies at the central bank. He could be in the job for several months until the government names Patel’s successor. In 2016, it took more than two months for then-deputy governor Patel to be named as a replacement for central bank chief Raghuram Rajan.
Here’s a look at some of the names making the rounds in the local press:
N.S. Vishwanathan, Deputy Governor, RBI
NS Vishwanathan, Deputy Governor at the RBI’s Third Bi-Monthly Monetary Policy Statement 2016-17. (Aniruddha Chowdhury/Mint)
Vishwanathan joined the central bank in 1981 and was appointed deputy governor for a three-year term in July 2016. An RBI board member said it’s traditional for the longest-serving deputy governor to take the helm until a permanent successor is found, which would make Vishwanathan the likely choice. Prior to becoming a deputy governor, he was an executive director at the central bank. Holding a Master’s degree in Economics from Bangalore University, his responsibilities at the RBI include banking regulation and risk monitoring.
Subhash Chandra Garg, Economic Affairs Secretary
A top bureaucrat in the Finance Ministry, Garg’s appointment would be a very clear signal from Modi’s administration that it wants greater control over the central bank. Garg, who is currently on the RBI’s board, has been pushing to change the central bank’s governance structure and get it to transfer more of its excess capital to the state. A former executive director at the World Bank, Garg has opposed the RBI using interest rate hikes to bolster the currency, which is Asia’s worst-performer this year.
Subir Gokarn, Executive Director at IMF
A former RBI deputy governor between 2009 and 2012, Gokarn has been India’s top official at the International Monetary Fund since 2015. At the central bank, he oversaw monetary policy, research, financial markets, communications, and deposit insurance. Holding a PhD in Economics from Case Western Reserve University in Cleveland, Ohio, Gokarn was also director of research at Brookings India and chief economist at Standard & Poor’s Asia Pacific.
Rajiv Kumar, Secretary, Department of Financial Services
A top bureaucrat in the financial services division of the Finance Ministry, Kumar has been focused on cleaning up the banking system since his appointment last year, including having to deal with fraud at a large state-owned bank and a debt default at a shadow lender. Prior to his current post, he worked at the personnel department, where he introduced an online system to improve bureaucracy. Kumar has a B.Sc degree in Zoology and a Master’s degree in public policy.
Shaktikanta Das, Former Finance Ministry Official
A former economic affairs secretary from 2015 to 2017, Das worked closely with the central bank. He is currently a member of the Finance Commission of India, and the government’s representative at the Group of 20 summits. Modi initially brought Das into the Finance Ministry to head up the revenue department, later moving him to economic affairs, where he helped to spearhead the prime minister’s controversial demonetization drive in 2016.
Hasmukh Adhia, Former Finance Secretary
Adhia, who has a PhD degree in yoga, retired as the top bureaucrat in the Finance Ministry last month. Finance Minister Arun Jaitley said Adhia declined several plum positions to pursue his favorite passions of spirituality and yoga, and spend more time with his son. Adhia had worked with Modi when the latter was chief minister of Gujarat state. Considered a close ally to the prime minister, he was one of the few people who knew about the surprise cash ban in 2016. Even though he was the top bureaucrat in the Finance Ministry, he hardly spoke on subjects other than taxation.
Govt should ease law on firing workers, reform labour laws: Panagariya
Mumbai: India should ease norms for hiring and firing workers to make it easier for companies to do business in the country, according to a former adviser to Prime Minister Narendra Modi’s government.
Easing the rules are crucial for employers, as their primary aim is not to fire workers, Arvind Panagariya, the head of government think-tank NITI Aayog, said in an interview in New Delhi. “You need consistency across labour laws.”
Finance Minister Nirmala Sitharaman, in her maiden budget this month, proposed combining multiple laws governing workers to form four sets of labor codes to improve the ease of doing business. But what’s needed is the reform of labor laws and not just streamlining of existing ones, said Panagariya.
He said the government’s plan to introduce a single minimum wage across the country may hurt businesses in smaller towns considering the wide differences in costs across urban and rural India. It could especially hurt small exporters and erode their competitiveness globally.
Modi’s government, which was re-elected for a second straight five year term in May, can do more to help grow the economy, Panagariya said, adding that some of India’s labor laws are probably more than 100 years old. Almost all of them are more than 30 years old.
Ban cryptocurrencies, consider launching own digital money: Panel to govt
New Delhi: A panel tasked with examining virtual currencies has recommended that the government should ban private cryptocurrencies and could consider launching its own digital money. It has also recommended that to deter the use of private cryptocurrencies, anyone doing so could be punished with imprisonment of up to 10 years.
The committee on virtual currency is headed by Finance Secretary Subhash Garg. The other members are Ajay Prakash Sawhney, secretary, Ministry of Electronics and Information Technology; Ajay Tyagi, chairman, Securities and Exchange Board of India (Sebi); and B P Kanungo, deputy governor, Reserve Bank of India (RBI).
The committee submitted its report — after a delay of a year. A piece of draft legislation, Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019, was also put in the public domain.
The Supreme Court is slated to hear a challenge to a ban on cryptocurrencies by the central government and the Reserve Bank of India.
In its report, the committee has recommended that distributed ledger technology (DLT), the most common use of which is blockchain, can be of great benefit to the country in several financial and non-financial areas, such lowering costs of the Know Your Customer process and improving access to credit.
Ban cryptocurrencies, consider launching own digital money: Panel to govt “There is no underlying intrinsic value of private cryptocurrencies. These… lack all the attributes of a currency. There is no fixed nominal value of these private cryptocurrencies. They neither act as any store of value nor they are a medium of exchange,” the panel said in its report, noting that since their inception, cryptocurrencies had demonstrated extreme fluctuations in their prices.
The draft Bill states: “Whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency or any combination thereof… shall be punishable with fine or with imprisonment which shall not be less than one year but which may extend up to ten years, or both.”
The panel said policymakers and regulators should have an open mind regarding the introduction of an official digital currency in India. “It may be possible to visualise some models of future official digital currencies but as of date it is unclear whether there is clear advantage in the context of India to come up with an official digital currency.”
The panel also recommended if required, a group can be constituted by the finance ministry’s department of economic affairs, with participation of the representatives of the Reserve Bank of India (RBI), the Ministry of Electronics and Information Technology (MeiTY), and the department of financial services for examination and development of an appropriate model of digital currency in India. If one is launched, the RBI should regulate it.Technology experts, however, were not very happy with the recommendations of the panel.
“The definition of cryptocurrency in the report is reasonably vague and may not cover something like Facebook’s libra or even bitcoin if one were to read it too technically. The drafting needs to be better,” said a lawyer who did not want to be named.Experts said it might be possible to develop a distributed ledger with nodes kept only in India.
“As a venture capitalist, I find… the suggestion of a ban quite disappointing because they did not engage with start-ups or domain experts,” said Nitin Sharma, technology investor and founder, Incrypt Blockchain.
Maruti, Hyundai skip rural slump, manage to increase sales in FY19
Chennai: The country’s largest two carmakers, Maruti and Hyundai, managed to increase their rural sales in 2018-19. This took place despite the rural economy being under pressure.
Both companies are optimistic about 2019-20, too, with the raising of rural allocations in the Union Budget and higher Minimum Support Prices. That means more of rural disposable income.
Maruti Suzuki’s (the country’s largest car maker) rural sales in 2018-19 rose to 205,000 units or 39 per cent of sales. A year before, it was around 165,000 units or 37 per cent of sales. This year’s outcome will depend on the monsoon, farm output and how rural sales pick up.
Hyundai’s rural sales were 17.3 per cent of its FY19 total, as against 15.6 per cent a year before. In FY20, the contribution is expected to be around 20 per cent.
Both companies — they address most of the spectrum — have said they are optimistic on the future, despite the overall industry having slowed. According to the Federation of Automobile Dealers Associations, passenger vehicle sales dropped by 4.6 per cent in FY19, to 224,755 units.
Shashank Srivastava, executive director for marketing and sales at Maruti, estimates growth of 4-8 per cent for the current financial year. However, he adds, a good monsoon and a satisfactory (for sales) festival season would be important, he adds.
With car penetration of around 22 per 1,000 population, India continues to be a big opportunity to sell cars, especially in rural areas. Srivastava says the rate of growth in the rural market has invariably been higher in recent years.
“Today, with booming internet users and a strong millennial population, rural markets are emerging as growth engines for sales,” he says.
Further, rural infrastructure has improved significantly. Motorability has seen sharp improvement there, resulting in exponential increase of two-wheeler sales and offering similar potential for cars.
Vikas Jain, national sales head at Hyundai Motor India, says customers of urban and rural markets might have differing needs but similar aspirations. In the latter, owning a car is a big aspiration.
Urban markets are experimenting with mobility solutions such as subscription and leasing. Hyundai has a partnership with self-drive car rental firm Revv and another with mobility solutions firm ALD Automotive India.
The company believes there is huge aspiration among youth in tier-1 and tier-II cities to own a vehicle. Rising disposable income and the expanding presence of financial institutions in rural markets, to offer credit at attractive rates, will enable ownership of cars.