The Government of India has cleared Sanjay Malhotra as the 26th governor of the Reserve Bank of India (RBI) from December 11, 2024, for three years. A secretary in the Department of Revenue at the Ministry of Finance, he replaces Shaktikanta Das who will retire after six years of service. Das had taken over since December 2018 and took India’s financial system through many twists and turns.
Malhotra will take over the central bank at a critical time when economic growth in India has cooled down to a seven-quarter low, registering only 5.4% in the latest quarter. Soaring concern of the government regarding the pace of recovery would mean calls for a cut in the interest rate to revive growth. At its latest monetary policy meet, RBI lowered the country’s GDP growth estimate for 2024-25 to 6.6 percent from the previous projection of 7.2 percent and kept the Q3 and Q4 growth rates at 6.8 percent and 7.2 percent, respectively.
Inflation remains a major issue before the central bank, with food prices remaining contributory to elevated headline inflation for September and October. Anticipated seasonal reasons in the near term for improving the food inflation trend make conditions like adverse weather factors along with rising global agriculture inflation a risk factor still intact. This had estimated Consumer Price Index or CPI inflation at 4.8 percent for the fiscal of 2024-25 and increased its estimate by 30 basis points.
External pressures in the form of geopolitical risks and trade policy uncertainties will have to be factored into the rupee’s volatility, while it has been under a lot of pressure as disappointing domestic economic data and sustained selling by foreign portfolio investors have weakened it.
Malhotra is a 1990-batch IAS officer from the Rajasthan cadre. He has rich experience in government administration. He is an alumnus of IIT Kanpur in Computer Science Engineering and has a master’s degree in Public Policy from Princeton University. He has more than three decades of experience in finance, taxation, power, and information technology. He has held various high-level positions, including Secretary of the Department of Financial Services.
Malhotra will be chairing his first meeting of the Monetary Policy Committee in February 2025, following the Union Budget. It is expected that the interest rate cut might be begun at this very meeting since inflation is peaking and economic growth is stabilizing. Improving the regulatory framework and meeting emerging challenges like cyber security threats to the Indian financial system will be part of Malhotra’s agenda.
