Guessing game over best candidate to succeed India’s Raghuram Rajan

Raghuram Rajan has become known for transforming the RBI into an inflation-targeting central bank and his successor will have big shoes to fill.

Raghuram Rajan has become known for transforming the Reserve Bank of India into an inflation-targeting central bank. Dhiraj Singh / Bloomberg

India will soon announce the new governor of its central bank, amid much speculation and anticipation about who is succeed Raghuram Rajan.

The government is narrowing it down to the final few candidates. There is little time to go, with Mr Rajan due to finish his three-year term on September 4. He is a former chief economist at the IMF and served as a professor of finance at the University of Chicago before taking on the job of governor in 2013.

It came as a surprise when it was revealed that Mr Rajan would not stay on for another term. He has been considered a popular figure, who predicted the global financial crisis of 2008.

On Thursday, finance minister Arun Jaitley told reporters, eagerly awaiting the announcement of who will take over the position that "you will come to know the conclusion, not the process" and "we will let you know when we decide", according to the Economic Times, an Indian business newspaper.

Mr Rajan has become known for transforming the RBI into an inflation-targeting central bank and his successor will have big shoes to fill.

Among those who are understood to be in the running for the role include Kaushik Basu, a chief economist at the World Bank. Subir Gokarn, who was deputy governor at the RBI and is now an executive director for India at the IMF, is also a potential successor, as is the current deputy governor, Urjit Patel.

The government’s chief economic adviser Arvind Subramanian’s name has also come up. He is a chief economic adviser to the government. Ashok Lahiri, who did the same job, has also been mentioned. Arundhati Bhattarcharya, the chairman of the State Bank of India, is also believed to be another candidate. Arvind Panagariya, former chief economist at he Asian Development Bank, is another potential person for the job.

“The appointment of a current or former deputy bank governor as Mr Rajan’s successor would point to policy continuity and go a long way to assuaging investor concerns,” says Shilan Shah, the India economist at Capital Economics.

“Of the names that have been circulating in the press, we think the best candidate to succeed governor Rajan at the RBI and ensure policy continuity would be Urjit Patel.”

The government does not seem to be in a rush to appoint and announce the new governor, with the local media speculating that the appointment would have been unveiled at the end of the past week. But that revelation failed to materialise, keeping everyone guessing as to who the replacement will be.

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