Ending months of suspense, the Government on Monday appointed Revenue Secretary Sanjay Malhotra as the new Governor of the Reserve Bank of India (RBI). Malhotra will succeed Shaktikanta Das, whose six-year term is ending on Tuesday.

This appointment comes at a pivotal moment, as GDP growth slowed to 5.4 per cent in the July-September quarter, increasing pressure on the central bank to balance inflation targeting with supporting growth through interest rate cuts. Another big challenge before Malhotra is to manage the Indian rupee which has been witnessing increased depreciation of late on the back strengthening Dollar.

“The Appointment Committee of the Cabinet (ACC) has approved the appointment of Sanjay Malhotra, Secretary, Department of Revenue as Governor, Reserve Bank of India for a period of three years from 11.12.2024,” an order issued by the Personnel and Training Department said.

The entry of 56-year-old Malhotra, a 1990 batch Indian Administrative Service (IAS) service officer of Rajasthan cadre, in the RBI coincides with the prospect of yet another new entrant in the top-decision making of the central bank. RBI Deputy Governor Michael Patra’s tenure, too, is coming to an end in January and the government has already advertised for the post. Additionally, with just two months to go for the Budget, the government will also have to appoint a new Revenue Secretary in place of Malhotra who has spearheaded the Department since December 1, 2022.

“Pro-reformist”

Malhotra’s colleagues and senior bureaucrats told businessline that his experience and accomplishments complement his future position as RBI Governor as before coming to the Revenue Department, Malhotra was Secretary in the Department of Financial Services Secretary (DFS). As DFS Secretary, Malhotra played a pivotal role in overseeing the functioning of the financial sector, especially public sector banks and the insurance sector. One of his stellar achievements as DFS Secretary was the successful launch of the Intial Public Offering of LIC which was then billed as India’s largest IPO netting over ₹21,000 crore to the central government.

Also, his colleagues describe Malhotra as “pro-reformist” who combines his academic training as a technocrat, having studied computer engineering in the prestigious Indian Institute of Technology (IIT), Kanpur, with a comprehensive understanding of the global financial markets and the modern day international financial architecture. Malhotra also has a Master’s degree in Public Policy from Princeton University.

“He understands fiscal policy, having served as Revenue Secretary and the influence of monetary policy in macroeconomic stability. And he brings in his tech-prowess to the development of fintech ecosystem in the country,” said a bureaucrat close to him.

The most important aspect under discussion among economy watchers was the present challenge of finding the right balance between growth and inflation control. The RBI’s inflation-targeting mandate puts the central bank in direct opposition to policy nudge of the central government that wants monetary intervention to support economic growth. Malhotra’s predecessor, Shaktikanta Das, masterfully manoeuvred the relationship between the central bank and the government over the last six eventful years which encompassed the Covid-19 pandemic. His colleagues believe that Malhotra has exactly that kind of temperament and thoughtful manner which would continue this tradition.

“He is a straightforward officer. He also holds his ground and carefully considers all dimensions, particularly examining data, before taking any decision. He is a good listener and the way he conducted meetings of GST Council showed a thoughtful conduct. Also, he has always been firm on stand though showing respect to opposition,” a senior government official said.