Governor Patel- Indian express Editorial with vocab- September 6, 2016

Governor Patel- Indian express Editorial with vocab- September 6, 2016

He must heed Rajan: Much depends on trust government reposes in governor, his ability to protect RBI’s power to say no.

Few governors would have taken over in as fortuitous circumstances as Urjit Patel who succeeds Raghuram Rajan as chief of the Reserve Bank of India. The country’s macro-stability indicators are far better today than three years ago when Rajan assumed office. The twin deficits are under control. The rupee, too, is one of the most stable currencies in the world, unlike in July-August 2012. But most important from a central banker’s perspective is inflation, the battle against which has been won for now, on the back of a normal monsoon. The combination of easing inflation and a stable domestic currency is also reflected in yields of the benchmark 10-year government bond, which have fallen below 7 per cent for the first time since July 2009.

Declining bond yields would allow Indian banks to book treasury gains on their outstanding security holdings. This will help them at a time when their balance sheets and earnings have been weighted by bad loans. Again, Patel can thank Rajan for his take-no-prisoners approach of giving banks no choice but to clean up their books by fully providing for their stressed advances by March 2017. The worst of that clean-up exercise may already be over. Patel, therefore, can get down to the regular business of central banking as opposed to the daily fire-fighting his predecessor had to engage in, especially in the early part of his tenure (कार्यकाल). Among his principal challenges now would be to institutionalise the new arrangement of deciding on interest rates by a Monetary Policy Committee. Patel will have to be far more persuasive than Rajan in getting other members of this panel to buy his so-called hard monetarist मुद्रावादी views. The other area where he has to work closely with the Centre, is on improving governance in state-owned banks and also pushing competition and financial inclusion through licensing of new banks, including payment and small banks.

Then there would still be the challenge of being compared to Raghuram Rajan, who seemed to tower over the institution he headed. Patel comes with a formidable reputation of his own — of being technically sound, with a grounding in India’s real economy and policy-making and a sense of how the establishment functions. As his predecessors would have told him, the first half of a governor’s term is often marked by a close working relationship with the government, which tends to sour towards the latter half. And as Rajan said on Saturday, everything depends on the trust the government reposes in the governor and it is important to protect the RBI’s ability to say no. That might even mean, as Rajan also said, occasionally disagreeing with the most powerful people in government.

heed – verb- to pay attention to something, especially advice or a warning

fortuitous – not planned, happening by chance

deficit – noun- the total amount by which money spent is more than money received

get down to sth — phrasal verb- to start to direct your efforts and attention towards something

institutionalize (UK usually institutionalise ) verb [ T ] (CUSTOM)

to make something become part of a particular society, system, or organization

persuasive -adjective - प्रेरक, making you want to do or believe a particular thing

formidable - inspiring fear or respect through being impressively large, powerful, intense, or capable.

synonyms:     intimidating, forbidding, redoubtable, daunting, alarming, frightening

Cambridge Advanced Learner's Dictionary - 4th Edition

tend to sb/sth — phrasal verb -to deal with the problems or needs of a person or thing