By Swati Bhat and Sarita Chaganti Singh
MUMBAI/NEW DELHI (Reuters) – India’s appointment of former central bank governor Shaktikanta Das as a key aide to Prime Minister Narendra Modi reinforces his focus on the country’s economy at a time when it is facing domestic and external challenges.
On Saturday, the government appointed Das, who served a six-year term as the Reserve Bank of India Governor until December, as a second principal secretary to the PM, a newly created position.
Das’ economic experience will help India at a time when the government and central bank are working in tandem to aid the economy’s recovery while trying to manage geopolitical challenges including trade tensions, analysts said.
The specific aspects of the new position are not clear. Pramod Kumar Mishra has been the principal secretary for Modi since September 2019. The principal secretary position is a political appointment and is considered to be among the most powerful posts in the current government, acting as an advisor and the key point of contact for all government ministries.
“Since Das has been appointed there, the inference can be that the (prime minister) wants a market economist person close to him. This could even include softly nudging the RBI,” said Madhavi Arora, Chief Economist at Emkay Global Financial Services.
The Prime Minister’s Office did not immediately reply to an email requesting a comment on the scope of the second principal secretary role.
Das has previously served as secretary in the finance ministry’s departments of economic affairs and revenue.
During his time in government, Das played a key role in the implementation of the controversial demonetisation plan of 2016 and the roll-out of the goods and services tax.
He was appointed as the 25th governor of the RBI in December 2018 after predecessor Urjit Patel resigned abruptly. Das went on to become one of the three longest serving governors at the bank.
“It is a sensible move because Mr. Das was involved in the making of both the fiscal and monetary policies during challenging times. He will be able to give the right advice to the Prime Minister on critical points of national interest,” said Rupa Rege Nitsure, an independent economist, who previously worked for L&T Financial Holdings and Bank of Baroda.
Das’ is known as a consensus builder and helped smooth over a contentious relationship between the RBI and the government when he took over as governor.
Das frequently met economists, bankers and other stakeholders in the industry before taking decisions while governor.
Das has also come to be known as someone adept at answering difficult questions, including during the demonetisation drive when millions of Indians struggled to access cash as the government reduced the amount of lower value notes in circulation.
“It’s a positive move and indicates more focus on the economy. Das will be able to blend the perspective of the government and RBI. His strength is that he was able to work with both government and RBI well,” said Gaura Sengupta, an economist at IDFC First Bank.
(Reporting by Swati Bhat and Sarita Chaganti Singh; additional reporting by Ira Dugal; editing by Christian Schmollinger)
