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India Appoints Former Bureaucrat Shaktikanta Das As Central Bank Chief


India's government named veteran bureaucrat Shaktikanta Das as the new governor of the Reserve Bank of India, following the abrupt resignation of Urjit Patel on Monday.

Das, a former economic affairs secretary, has been appointed for a period of three years, the government said in a statement.

A retired officer of the Indian Administrative Service, Das will be the 25th governor of the RBI.

Patel unexpectedly resigned on Monday citing personal reasons, though markets and economists were speculating such a move after the rift between the central bank and the government became public.

The two were at loggerheads over important issues such as central bank independence, the use of central bank reserves, bad loans, and rules on lending to small and medium businesses.

Patel quit ahead of the expiry of his term in September 2019.

Financial markets and the Indian rupee reacted sharply to the RBI governor's resignation on Tuesday.

Several economists commented that Das's appointment is positive for the Indian market as the government was able to quickly clear the uncertainty linked to the central bank.

Patel's resignation came at a worse time for Prime Minister Narendra Modi. Results of the local elections in some key states suggested that his party, the BJP, faced defeat some heartland states such as Rajastan and Chhattisgarh.

The main opposition, the Congress, attributed part of their victory to voters' displeasure with the some of the Modi government's economic decisions, mainly demonetization.

Das, who has held key positions in the finance ministry under the current government and the previous one, is a member of the Fifteenth Finance Commission and India's Sherpa to the G20.

The Narendra Modi government's drastic move of demonetization, which meant abrupt cancellation of more than 80 percent of currency in circulation, was announced when Das was the economic affairs secretary.

He was often seen defending the government's decision then, while opposition politicians and several economists called the measure "draconian".

Demonetization led to a severe shortage of cash in the months following its announcement on November 8, 2016 and people with low income and those with jobs in the unorganized sector was largely hit. Small businesses also were affected with several closing down.

A year since demonetization, Das announced on Twitter that the measure reaped "significant gains for the economy".

The government also implemented the Goods and Services tax when Das was the economic affairs secretary. The manner in which the measure was implemented came in for a good amount of criticism.

Das is a postgraduate in history from the University of Delhi and studied at the St. Stephen's College, one of India's most prestigious educational institutions.

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