Sanjay Malhotra to assume office as 26th RBI Governor amid inflation concerns today

IAS officer Sanjay Malhotra has been appointed as the 26th RBI Governor, succeeding Shaktikanta Das. With inflation at 6.2 per cent and GDP growth slowing, Malhotra faces critical decisions on India’s monetary policy.

Sanjay Malhotra, a veteran of the Indian Administrative Service (IAS) officer who served in Rajasthan cadre in the 1990s, is set to assume charge as the 26th Governor of the Reserve Bank of India on Wednesday. Malhotra will succeed Shaktikanta Das, who retires after an impactful six-year tenure.

Direct transition from north section

Malhotra will be the first RBI Governor after Duvvuri Subbarao who moved directly from the North Block, the seat of India’s finance ministry. Known for his expertise in finance, taxation and IT, Malhotra recently served as Secretary of the Reserve Bank of India.

With distinguished academic qualifications including a Bachelor of Computer Science from IIT Kanpur and a Master’s degree in Public Policy from Princeton University, Malhotra brings more than three decades of professional experience.

Financial challenges await Malhotra

Malhotra took over amid growing financial difficulties. Retail inflation rose to 6.2 per cent, breaking the Monetary Policy Committee (MPC) tolerance band, while GDP growth slowed to 5.4 per cent in the July-September quarter. In its December review, the RBI raised the inflation projection for 2024-25 to 4.8 per cent (from 4.5 per cent) and revised growth forecasts downward to 6.6 per cent (from 7 per cent).

Growth and inflation: A balancing act

The key question is whether Malhotra will prioritise inflation first or boosting growth. Analysts suggested the groundwork for rate cuts may already have been laid. Two outside MPC members voted in December to cut the rate by 25 basis points, signaling the possibility of shift in monetary policy.

Legacy and expectations

Malhotra’s appointment comes as India navigates external pressures, including potential US tariff hikes on China, alongside domestic challenges. Market experts anticipate that his leadership may align with a more accommodative monetary stance, steering the economy towards stability while addressing immediate fiscal concerns.

As Malhotra steps into one of the most critical roles in Indian policymaking, his vast experience and leadership will be pivotal in shaping the country’s monetary and financial policies over the next three years.

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