Revenue Secretary Sanjay Malhotra to be RBI Governor

New Delhi | Mumbai: The government appointed Indian Administrative Services (IAS) officer Sanjay Malhotra as the next governor of the Reserve Bank of India (RBI) for a three-year term, succeeding Shaktikanta Das, whose tenure ends Tuesday. Malhotra takes over at a time of high inflation and slowing growth amid calls for rate cuts to bolster the economy.

The IAS officer, currently secretary, department of revenue, is from the 1990 batch and belongs to the Rajasthan cadre.

"The Appointments Committee of the Cabinet has approved the appointment of Sanjay Malhotra as governor, RBI, for a period of three years starting from December 11, 2024," the government announced Monday. The department of financial services in the finance ministry later issued a notification on Malhotra's appointment by the central government.


A career bureaucrat, Malhotra, has an engineering degree in computer science from the IIT, Kanpur, and a master's degree in public policy from Princeton University in the US.

Led Taxation Reforms
Das was his predecessor in the finance ministry as both revenue and economic affairs secretary. He leaves office after a six-year stint as governor, the second-longest term after Benegal Rama Rau, who served for 7.5 years. Appointed in 2018 for an initial three-year period, Das got a three-year extension in 2021.

Before taking over as revenue secretary, Malhotra was financial services secretary in the finance ministry and was also on the board of the RBI. In his two years at the department of revenue, he led key reforms in both direct and indirect taxation, including timely refunds, simplification of the capital gains tax regime and extensive use of technology to improve taxpayer services. He was also on the boards of State Bank of India and REC in an ex-officio role.

Tech play
An advocate of non-intrusive methods of tax collection and against revenue overreach, he encouraged the department of revenue to use technology for detecting tax evasion and use advanced analytics in tax audits. Malhotra has been pushing for simplification of goods and services tax procedures and was instrumental in initiating the process for simplification of income tax law.

Last week, Malhotra asked revenue officials to exercise caution when issuing demand notices to businesses and industries, asking them to put the interests of the economy ahead of revenue collection.

"If in the process of garnering some small revenue, we are hurting the whole industry and economy of the country, that is certainly not the intent," Malhotra had said at the 67th annual day of the Directorate of Revenue Intelligence (DRI). "Revenue comes in only if there is some income, and so we have to be very cautious that in the process, as they say, 'do not kill the golden goose."

Plate full
The mild-mannered Malhotra, who is known for taking people along and keeping himself open to ideas, will have his plate full as the next governor.

Economists and experts said that the key challenge before him will be to balance growth amid inflation worries and the challenging external environment.

"Malhotra's appointment is likely to increase market expectations of rate cuts in 2025, in terms of both quantity and timing," Anubhuti Sahay, head of India Economic Research, Standard Chartered Bank said.

India's growth moderated to a seven-quarter low of 5.4% in the September quarter, down from 8.1% in the year earlier and 6.7% in the preceding three-month period.

Retail inflation surged to a 14-month high of 6.2% in October, up from 5.5% in September, mostly on account of the increased prices of vegetables, fruit and edible oil. This breached the outer bounds of the central bank's inflation target - 4% with a two-percentage-point tolerance band on either side - for the first time since August 2023.

Subsequently, the RBI last week decided to keep the repo rate unchanged at 6.5% but reduced the cash reserve ratio (CRR) by 50 bps in two equal tranches of 25 bps each.