New Delhi: The Modi government on Tuesday appointed S. Gurumurthy – a chartered accountant who is also convener of the Swadeshi Jagran Manch, a trade body that is affiliated to the right-wing Rashtriya Swayamsevak Sangh (RSS) – to the board of the Reserve Bank of India.
In a late evening announcement on Tuesday, the Centre also approved the appointment of Satish Marathe, a banking industry executive with decades of experience, to the RBI’s board.
Both Marathe and Gururmurthy will serve as “part-time non-official directors” on the RBI’s central board.
“The Appointments Committee Of The Cabinet has approved the proposal of the Department of Financial Services for the appointment of Shri Swaminathan Gurumurthy, as part-time non-official director on the Central Board of the Reserve Bank of India under Section 8(1)(c) of the RBI Act 1934, for a period of four years from the date of notification of the appointment…,” the government notification stated.
The Central bank’s board is split into official and non-official directors: the former includes the RBI’s governor and not more than four deputy governors. Non-official directors are appointed by the government, with the RBI Act allowing for up to ten directors to be nominated.
S. Gurumurthy. Credit: PTI
Generally speaking, in the past, non-official directors have included people without publicly-declared political leanings. The appointment of non-official directors usually include well-known economists, experts, captains of industry in addition to two government officials.
For instance, in 2016, the Centre appointed TCS CEO N. Chandrasekaran and Mahindra & Mahindra non-executive chairman Bharat Narotam Doshi as non-official directors. In 2017, it appointed economists Rajiv Kumar, Ashok Gulati and entrepreneur Manish Sabharwal to the RBI board.
Political appointments?
In a break from the past, these appointments look to place candidates that have openly-declared political leanings. While Gurumurthy is an economist, chartered accountant and a longtime commentator on economic and political affairs, he is also a prominent supporter of the current BJP government at the Centre and of Prime Minister Narendra Modi.
Marathe, on the other hand, has had stints at Bank of India, the United Western Bank Ltd, Janakalyan Sahakari Bank among others over the last 20 years. His focus and experience has been on cooperative banks and their impact on the rural and agricultural sector.
In his younger days, Marathe was associated with the right-wing Akhil Bharatiya Vidyarthi Parishad (ABVP), a large pan-India student organisation that is affiliated to the RSS. According to media reports, he served as the ABVP’s treasurer for four years.
As The Wire has reported and analysed, Gurumurthy is part of a small group of swadeshi economics thinkers whose views are given considerable importance by Modi and key finance ministry bureaucrat Hasmukh Adhia. These proponents of ‘economic nationalism’ are generally opposed to foreign capital and businesses and instead believe that India’s 50-million small and medium businesses can create jobs and transform the Indian economy.
Gurmurthy is believed to played an important role in suggesting and supporting the Modi government’s demonetisation move, its MUDRA scheme and the Niti Aayog’s position of focusing on a “Bharatiya approach to development”.
RBI collision
After reportedly providing consultation on demonetisation before it happened, Gurumurthy defended the move, calling it a much-needed attack on excessive liquidity and a “fundamental corrective to the economy”.
In the past, the Swadeshi Jagran Manch convener has also used his Twitter account and public speeches to complain about the RBI’s policies. In September 2017, he criticised the Central bank’s provisioning norms, noting that it did not take into account “non-convertability, no foreign investments in banks, govt ownership and 30% deposits being in government securities”.
In this context, Gurumurthy lashed out at RBI, noting that it was “agenda-driven” and trying to destroy Indian business.
I said the RBI is destroying Indian business & also trying to force the govt to privatise the PSU banks. The RBI is is agenda driven. This is wrong. RBI has to devise policies which will work in and for India. https://t.co/fGldvVrXF5
— S Gurumurthy (@sgurumurthy) September 30, 2017
The RBI’s central board is not normally a decision-making body and instead serves as a forum or venue for discussion. However, it does serve as a platform for important public-facing decisions such as demonetisation or a move to change the central bank’s dividend policy.
Other policy decisions, such as interest rate cuts, are handled by the separate monetary policy committee.
With these appointments, the Modi government has filled its quota of ten directors to RBI’s board. Gurumurthy and Marathe will attend their first board meeting tomorrow.