AUTHOR- Nimisha Khattar
Popularly known as the Inflation Warrior, Dr. Urijit R Patel, has been associated with RBI since 2013. He has played a key role in formulating and shaping the monetary policy of India. With his appointment as the new RBI Governor, we can expect the government to continue with the existing macroeconomic policy.
An Economist from Yale University, Dr. Patel, believes that in order to make India a country characterized by stable growth, inflation needs to be in control. Dr. Patel has brought about many significant changes. Adopting Consumer Price Index as the base, instead of Wholesale Price Index, for measuring inflation in an ‘inflation targeting approach’ was one revolutionary reform.
Dr. Patel has been a great critic of the excessive government spending and subsidies. Time and again, he has emphasized the need for a discipline in fiscal expenditure. In order to control inflation, since the degree of correlation between monetary policy and fiscal policy is high, the greatest contribution by Dr. Patel has been to keep inflation in the targeted rate bracket of 4% ± 2% in the recent years.
Apart from his contribution in controlling the inflation by increasing the interest rates and reducing fiscal expenditure, one of the smart moves that Patel committee came up with was setting up a team of six members instead of one alone, for deciding the policy rates. This has led to minimization of risk and has helped in making the process a democratic one.
Considered as an owl (a symbol of wisdom) by the ex-RBI Governor, Dr. Raghuram Rajan, Dr. Patel had been advising central government on some major issues as well – like the development of debt market, growth of foreign exchange market and the banking sector.
Thus, it can be concluded that Dr. Urijit Patel’s contribution played a massive role in the economic development of India and going by the logic of keeping repo rate higher than the CPI, as remarked by him in the committee recommendation, let’s also keep our faith in the owl higher and stronger.