India appoints Modi ally as new central bank head
In this file photo taken on April 1, 2014, the Reserve Bank of India (RBI) logo is seen on the main entrance gate of the RBI headquarters in Mumbai. The head of India's central bank, Urjit Patel, announced his resignation on December 10, 2018 following a public spat with Prime Minister Narendra Modi's administration about alleged government interference.
INDRANIL MUKHERJEE / AFP
India appoints Modi ally as new central bank head
(Agence France-Presse) - December 12, 2018 - 11:23am

NEW DELHI, India — The Indian government Tuesday named an ally of Prime Minister Narendra Modi as new central bank head after his predecessor quit following a row about alleged government interference.

Shaktikanta Das, named in a government statement as new Reserve Bank of Indiagovernor, is a former senior finance ministry official and a key figure in Modi's controversial "demonetisation" scheme of 2016.

His predecessor Urjit Patel announced his surprise resignation late Monday following months of tensions with Modi's government over interference in policy.

The government was thought to be pressuring the RBI to enact policies to help spur growth ahead of next year's elections, when Modi will run for a second term.

It was also believed to be unhappy with the RBI over issues including its handling of interest rates, how to deploy reserves and what to do about the sliding rupee.

Modi stunned Asia's third-largest economy in November 2016 by withdrawing 86 percent of banknotes from circulation.

The move was aimed at cleaning up India's graft-ridden economy where large volumes of transactions are conducted in cash and therefore undetected by the tax authorities.

Critics said it caused unnecessary suffering to millions of India's poor who operate outside of the formal economy.

Indian growth slumped as low as 5.7 percent in mid-2017 as it reeled from the move and other economic reforms, including the introduction of a nationwide goods and services tax.

"Modi government has hired an insider who will be sympathetic to government concerns and not hold diverging opinions as the head of RBI. Unlike Patel or (predecessor Raghuram Govind) Rajan, Das will offer no independent views and was also a key member when the demonetisation decision was taken," said Ashutosh Datar, an independent economist.

"This is extremely disappointing a choice and is the final straw in chipping away RBI's integrity and freedom to set rates or take policy decisions," he said.

NARENDRA MODI SHAKTIKANTA DAS URJIT PATEL
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