New Delhi: Was the former Reserve Bank of India (RBI) governor Shaktikanta Das promoted or demoted after he was appointed as the principal secretary to Prime Minister Narendra Modi? Not many would have a straight answer to that question, but what one could safely say is that he surely is among the few favourite bureaucrats of the prime minister.
Never in India’s history has a former RBI governor been inducted into the topmost layer of the executive. But to call his appointment merely “unprecedented” will be injustice to the Modi government’s extraordinary zeal to override norms and conventions.
When Das was appointed as the RBI governor, most observers believed that the government’s control over the central bank was only likely to increase, given the fact that Das served in many plum positions in the last few years. He was member of the 15th finance commission, revenue secretary and economic affairs secretary when he played a crucial role in implementing the Goods and Services Tax (GST), and even served as India’s Sherpa in G20.
As the RBI governor from December 2018 to December 2024, he succeeded a period after the Union government amended the RBI Act in 2016 to empower the cabinet secretary as the head of the committee that selects members of the crucial Monetary Policy Committee (MPC). The government’s move undermined the position of the RBI governor and made him subordinate to the government.
Das’s tenure was filled with a number of ups and downs, with him managing the country’s monetary affairs during the COVID-19 pandemic and bursts of inflationary cycles. However, in the last quarter of his term, as the government stared at an economic slowdown, he withstood immense pressure from ministerial quarters to cut lending rates, leading to a belief among market observers that Das may have been much more individualistic than he was thought to be.
Das supported the RBI committee members’ opinion that any cut in rates would lead to greater inflation. That his successor Sanjay Malhotra almost immediately cut rates after his appointment as the new RBI governor further buttressed such a belief.
However, all such speculations turned into thin air when Das was brought into the government as the principal secretary to the prime minister to replace P.K.Mishra, one of the most influential bureaucrats during Modi’s second term.
This has again kickstarted a debate about RBI’s autonomy – or the lack of it – under the Modi government, especially since the RBI has historically served as the institution invested in a long-term view, and even against the pressures of a trigger-happy government that likes to overspend in times of crises.
Although a majority of fiscal decisions taken by the Modi government – be it GST, demonetisation, or capex inflows – are sought to be milked for political gains, the RBI has more or less stood its ground. Even Das, a blue-eyed officer, could not make much of a difference.
More importantly, amidst the opposition’s attacks on the Modi government for allegedly compromising historically autonomous institutions of our democracy, Das’s appointment has raised more eyebrows than what was anticipated.
Das, probably the first principal secretary in the Prime Minister’s Office (PMO) to have expertise in fiscal and monetary matters, is the first RBI governor to be reinstated in the topmost layer of the government. One can compare his appointment to Manmohan Singh who went on to become Union finance minister after he had served as the RBI governor. But there is a crucial difference. Unlike Singh, who officially joined the Congress before assuming a cabinet position, Das has been brought in as an officer.
Former chief justice of India Ranjan Gogoi openly sided with the Bharatiya Janata Party (BJP) before being nominated as a Rajya Sabha MP as a nominated member. But Das remains in his independent position even when deeply entrenched in the executive, having chosen to join the government after serving six years as the RBI chief.
The lines that separated powers in Indian democracy, some may think, continue to get blurred. Two special cases come to mind. The first is of former CAG G.C. Murmu. Murmu was former principal secretary to Modi when he was Gujarat chief minister, went on to become an integral part of Prime Minister Modi’s coterie of bureaucrats, and also became the first lieutenant governor of the newly created Union Territory of Jammu Kashmir in 2019 after the abrogation of its special status, before being appointed as the CAG, the coveted position responsible for auditing and exposing corruption in the government. His tenure as the CAG, unsurprisingly, was perhaps the most uneventful and lacklustre.
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Then one can think of Chief Election Commission Gyanesh Kumar, whose rushed midnight appointment amidst Leader of opposition (LoP) Rahul Gandhi’s dissent came widely under the scanner. Like Murmu, Kumar, too, had been integral in the Modi government’s most-political decisions. He is said to have drafted the Bill that led to the abrogation of special status for Jammu and Kashmir. He also played an important role in legal and administrative matters during the hearing of Ram Janmabhoomi case in the Supreme Court, and was also instrumental in the creation of Shri Ram Janmabhoomi Teerth Kshetra Trust that oversaw the temple’s construction.
Das, Murmu, and Kumar, all of them career bureaucrats, perhaps did what was expected of them while serving the government. However, their plum positions now may also be seen as rewards for their efficiency in implementing the BJP’s political, and often polarising, decisions. That may not be good optics for the government in any part of the world, but like always, the Indian prime minister doesn’t look like he seems to care.
