Sanjay Malhotra took charge as the 26th Governor of the Reserve Bank of India (RBI) on Wednesday. He has succeeded Shaktikanta Das, who served as RBI governor for six years, making him one of the longest-serving governors.
Malhotra will serve a three-year term, starting from today, at the helm of the central bank.
The 56-year-old governor assumed charge at a time when the country is facing a slower growth, higher inflation and amid calls for a rate cut. Prior to his new role as RBI governor, Malhotra was serving as revenue secretary.
Malhotra, like Das, is also a career bureaucrat who joined the service in 1990 and belongs to the Rajasthan Cadre.
Throughout his career of 33 years, Malhotra held a diverse portfolio including power, finance, taxation, information technology and mines.
The Challenges Ahead
Former governor Das during his departing message highlighted that restoring the inflation-growth balance is one of the major focus points for the RBI.
Retail inflation in the country reached a 14-month high of 6.2 per cent in October and economic growth rate slowed down to 5.4 per cent in the second quarter of the current financial year.
Before the December policy review meeting, central minister including finance minister Nirmala Sitharaman and commerce and industry minister Piyush Goyal also urged for a rate cut to boost growth.
However, RBI has maintained the repo rate at 6.5 per cent since February 2023. It has reduced the cash reserve ratio (CRR) last week by 50 basis points to inject liquidity into the banking system.
RBI has projected Q3 growth higher at 6.8 per cent and Q4 at 7.2 per cent. As per predictions, the CPI inflation for 2024-25 is also projected at 4.8 per cent. If it remains at that level then RBI and its Monetary Policy Committee (MPC) may consider a rate cut. Many economists also believe that a repo rate cut is conceivable in February next year.
The next Monetary Policy Committee (MPC) meeting is scheduled for February 5-7, 2025, following the Union Budget 2025-26 announcement.
