Reserve Bank of India Governor Shaktikanta Das has been named the “Governor of the Year” by the Central Banking Journal (CBJ) for cementing critical reforms, overseeing world-leading payments innovation and steering India through difficult times with a steady hand and well-crafted turn of phrase.

CBJ noted that it was in managing the Covid crisis that Das had perhaps his greatest impact, appearing as a voice of calm amid the fear, and steering the RBI deftly between intense political pressures on one side and economic disaster on the other.

Bio bubble

The timely creation of a ‘bio bubble’ in March 2020 to quarantine key staff ensured the continuity of critical central bank operations throughout the most intense phases of the pandemic. Staffing in the bubble averaged around 200 over the 500 days of its operation, until it closed in August 2021.

The Journal observed that Das has defended reform progress and driven it further himself.

“He shepherded the bankruptcy code back into legality after the Supreme Court overturned the previous version. He pushed banks to raise more capital, restructured the RBI to create a stand-alone supervision department, and established a College of Supervisors to train the next generation.

“The second edition of the RBI’s medium-term ‘utkarsh’ strategy – another Das innovation – has “refining the regulatory and supervisory framework” as a key plank,” CBJ said.

Bad loans

The journal noted that the feared surge in bad loans due to the pandemic never materialised, and India enjoyed one of the fastest recoveries of any country worldwide.

“Das was forced to steer close to the wind in co-operating with a government that has frequently put the RBI under pressure to offer more forbearance than might be wise. But most observers think he got the balance broadly right,” it said.

The Journal said the monetary policy committee will not be able to rest easy for some time to ensure inflation expectations do not become entrenched at the top-end of the central bank’s target.

Das will also have to guard against perceptions of fiscal dominance as the government comes to terms with the legacy of its Covid spending measures.

“A forthcoming general election, to be held before May 2024, may add to the pressure. An economy as complex as India’s will likely never be free from challenges but, as Das faces up to the remainder of his second term, he can take pride in major achievements so far,” CBJ said.