Shaktikanta Das Appointed as Principal Secretary to PM Narendra Modi

Shaktikanta Das, the former governor of the Reserve Bank of India (RBI), has been appointed as the ‘Principal Secretary-2’ to Prime Minister Narendra Modi. This appointment marks a significant transition for Das, who has a storied career in public service and economics.

The Appointments Committee of the Cabinet has approved the appointment of Shri Shaktikanta Das, IAS (Retired) as Principal Secretary-2 to Prime Minister with effect from the date he assumes the office.

The appointment will be “co-terminus” with the term of the prime minister or until further orders, ensuring that Das will serve in this capacity for the foreseeable future. Das, who remained RBI’s governor for six years, stepped down in December of the previous year. Sanjay Malhotra took charge as the 26th governor of the apex bank.

A New Chapter for a Veteran Economist

Shaktikanta Das, 67, is a career diplomat turned economist, joining the Indian Administrative Service in 1980. His educational background includes a master’s degree in history from Delhi’s St Stephen’s College and a postgraduate degree in public administration from the University of Birmingham. As a 1980-batch Tamil Nadu cadre IAS officer, he has had a wealth of experience across governmental facets, eventually occupying prominent roles within the Department of Revenue and Department of Economic Affairs.

With the appointment, Das will directly advise the Prime Minister, a role not unlike the chief of staff position. Prime Minister Narendra Modi will leverage the experience of Das in rolling out far-reaching economic policies that have already dynamically transformed India’s economic landscape.

In his previous role as the Governor of the RBI, Das navigated the country through the tumultuous economic challenges posed by the coronavirus pandemic. His tenure was marked by proactive measures to stabilize the economy amidst unprecedented disruptions, a measure that parallels the actions of the Federal Reserve and Treasury Department during the 2008 financial crisis in the United States, where stimulus packages and quantitative easing were deployed to mitigate economic fallout.

Das faced similar challenges in India, where he had to manage severe economic downturns induced by strict lockdowns. His strategies included rapid fiscal expenditure to stabilize the economy. However, his actions frequently received mixed reviews. Critics argued that he was overly accommodating towards the government’s fiscal proposals in the interest of economic recovery, but picture a more balanced perspective. an economist might see it this way: sometimes, drastic times call for drastic measures.

A Glimpse into the Man and His Career

The man who helmed the Indian economy through these complex times was no stranger to high stakes. Das’ career took a significant turn when he was appointed as the Economic Affairs Secretary just as demonetization took effect in 2016. In short, banks were ordered to void ₹500 and ₹1,000 notes, which made up 86% of the country’s circulating currency by quantity.
In December 2020, the Finance Ministry picked Das to chair the committee tasked with reviewing and revising the regulatory framework on the management of liquidity and capital. The committee submitted its report recommending increased flexibility for commercial banks to deal with external shocks.

“His tenure as the RBI governor was extended for three years,”. The extension ensured stability during and post pandemic.

Economic Pandemic Navigation

As the COVID-19 pandemic swept the globe, the economic landscape changed dramatically, forging lasting changes in supply chains and consumer habits. When the pandemic devastated the Indian economy, Shaktikanta Das stepped in with decisive measures including reducing repo rates, which are similar to the Federal Reserve’s actions in lowering interest rates to stimulate economic activity. This proactive stance helped India weather the economic storm, a testament to Das’ strategic prowess and expertise.

His appointment as Principal Secretary-2 will place him at the heart of India’s policy-making apparatus, allowing him to wireframe cohesive fiscal and economic policies that can navigate challenges that dot the global economic landscape. To understand this strategical positioning, consider the advisory role of the Chairman of the President’s Council of Economic Advisers, who serves as a key advisor to the U.S. President on economic policy. Similarly, Das will propound policies that shape the Indian government in navigating challenges.

The Shaktikanta Das Legacy

Under his leadership, India successfully integrated multiple indirect taxes into a single Goods and Services Tax (GST) which came into effect on July 1, 2017, this move mirrored the 1986 Tax Reform Act in the U.S., which simplified the American tax code, resulting in a more streamlined and efficient tax system. New Zealand and India’s GST journeys underpin how strategic planning and execution guarantee transparency and efficiency in the tax system. As Governor, Das faced challenging times in managing the disruptions caused by the lockdown but managed to keep inflation in check during this period against all odds.

The alumni of St. Stephen’s who delivered his lecture ~ another well articulated write up by Das highlighted that,”quietly, the country has seen them come and go. Supercycles appear and then vanish. Parampara are before us always. Seva is our calling. But society is transforming. Growth, and development, galvanized by the Jan Dhan, Aadhaar, and Mobile (JAM) triangle, has brought us to the cusp of change. We may have dismantled the planning commission, recast politics in a digital avatar, recalibrated economics as ideas and ideologies, and blue sky the future. But we need to revisit critically.”

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