The central government on Wednesday approved the appointment of Poonam Gupta as the new deputy governor (DG) of the Reserve Bank of India (RBI), to succeed former DG Michael Patra, who helmed some of the key departments during his term between January 2020-2025. She is the first female DG appointed at the RBI after a period of nearly 14 years.

Gupta is only the fourth DG to be appointed at the RBI, an institution which has been in existence since 1935. Prior to her, the three other woman DGs include KJ Udeshi (2003-2005), Shyamala Gopinath (2004-2009) and Usha Thorat (2005-2010). There have been no female governor at the RBI since its inception 90 years ago.

Economy forte

In 2021, Gupta became the first woman to head the prominent New Delhi-based economics think tank, the National Council of Applied Economic Research (NCAER). She is also a member of the Economic Advisory Council to the Prime Minister.

Often considered as a top ranking economist in India and globally, Gupta has an impactful career of over two decades in the field of economic research, academics, and public advocacy and policy.

Gupta was associated with the World Bank Group before joining the NCAER. She rose from the ranks of senior economist to lead economist-India, and was eventually elevated to the role of lead economist, in-charge of global macro, market research, IFC.

Gupta also worked as an economist and professor at domestic and foreign institutions including Hansraj College, Hindu College, University of Maryland, IMF European Department, ICRIER, and Delhi School of Economics. She has also served as the Reserve Bank of India Chair Professor at the National Institute of Public Finance and Policy (NIPFP) between 2011-2013.

Likely dovish stance

Economists largely consider Gupta to have a dovish bent on monetary policy, which may be helpful for a rate cut.

In a recent opinion piece for a business daily, Gupta said it would be erroneous to argue that an inflation rate of 4.8 per cent would hurt growth. “There is no clear trade-off between growth and inflation at moderate inflation levels. The trade off is more clearly established for very low or very high level of inflations,” she wrote.

She called for a more relevant and updated CPI basket, more accurate inflation and growth forecasts and better measurement and management of households’ inflationary expectation, and improvement in transmission of monetary policy rates.

She said it would be prudent to conduct an independent review to address questions on whether targeting 4 per cent inflation is apt, or the RBI should consider having a more narrow range of inflation tolerance band of 4-6 per cent instead of existing 2-6 per cent, with no explicit point target.

In a recent paper for NCAER, co-authored with Professor Barry Eichengreen from University of California, Berkeley, Gupta said over the last decade, half of India’s larger states have added more than 10 percentage points to their debt-to-state-GDP ratios. Of the rest, about half have exhibited fiscal prudence, while the other half have exhibited moderate levels of debt increase. Under the business-as-usual scenario, a majority of states will become even more indebted, and the financial condition of more and less indebted states will continue to diverge, it said.

To counter this challenge, she writes that officials should first conduct a forensic analysis identifying the specific revenue shortfalls or expenditure overruns. Second, state governments should improve revenue mobilisation through digitalisation and administrative streamlining, by broadening tax base, raising property tax, and adopting new taxes, and by increasing privatisation receipts. State governments should also create self-standing debt management offices and own independent fiscal councils.

“The RBI should review its policies of intervening in the markets to cap spreads on the bonds of heavily indebted states... the role of the Finance Commission should be reconsidered,” the paper said.

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Published on April 3, 2025