'Most names doing rounds to replace Rajan are inflation doves'

Mumbai: In what is likely to appease the pro-growth lobby, Japanese brokerage Nomura has opined that most names being considered to fill the post of RBI Governor have a neutral-to-dovish stance on fighting inflation, unlike the incumbent Raghuram Rajan whose hawkishness is well known.

"The majority of candidates under consideration to replace Governor Raghuram Rajan appears to have a neutral-to-dovish bent, unlike Rajan, who was considered relatively hawkish," its economists said in a note today.

The note, however, added that even though the personal preferences of Rajan's successor can change the direction of monetary policy, RBI's monetary policy agreement with the government and setting up of the monetary policy committee can limit his/her influence.

"Nevertheless, the next RBI Governor has his/her work cut out in terms of establishing his/her individual credibility and in re-affirming the RBI's independence," the brokerage said.

Among the speculated candidates, it said current Chief Economic Advisor Arvind Subramanian, NITI Aayog Deputy Chairman Arvind Panagariya and SBI Chairman Arundhati Bhattacharya are the "doves" in the pack.

Economic Affairs Secretary Shaktikanta Das and former RBI deputy governors Subir Gokarn and Rakesh Mohan are known to be "neutral" in their stance.

Current Deputy Governor Urjit Patel, whose recommendations have practically guided the monetary policy, is an inflation "hawk", according to the brokerage.

Governor Rajan, who surprised all with his decision to return to academics, has been critical of the 'bird analogies' when it comes to the stance on inflation and has stressed on working as per incoming data.

It can be noted that when Rajan took over, retail inflation was trending in high double-digits and has almost halved now, which has helped establish the credibility of the monetary policy.

Rajan's strong anti-inflationary stance, which led to three rate hikes after his taking over, had got the RBI a lot of flak for not doing enough to push sagging growth.

The finance ministry, which will be deciding Rajan's successor in consultation with the Prime Minister, had repeatedly said it wants the central bank to cut rates.