RBI’s First Lateral Hire Quits But Central Bank Still Open to Outside Talent, Say Analysts

Prachi Mishra, a Columbia University-trained economist who spent nearly 10 years working for the IMF, joined the RBI as a “specialist adviser” in November 2014.

The MPC's bi-monthly policy statement hasn't surprised. Credit: Reuters

What impact will Prachi Mishra’s exit have on the state of lateral hiring at the RBI?. Credit: Reuters

New Delhi: The head of the Reserve Bank of India’s strategic research unit, Prachi Mishra, has left the central bank, according to multiple people with direct knowledge of the matter.

Mishra, a Columbia University-trained economist who spent nearly 10 years working for the IMF, joined the RBI as a “specialist adviser” in November 2014 and was hired during the tenure of former governor Raghuram Rajan.

At the time, her appointment sparked pleasant surprise: it was “the first lateral entry in the central bank in the promotion grade”.

She started off at the central bank’s economic and policy research department – which at the time was headed by then-deputy governor Urjit Patel. Media reports at the time noted that her role was to strengthen research at the RBI, which at the time resembled was more akin to information management than actual empirical research.

In late 2015, shortly before she was made head of the RBI’s research unit, Mishra was made available for a number of media interviews and profiles – central bank officials below the rank of deputy governor are rarely authorised to speak to Indian journalists.

Prachi Mishra. Credit: YouTube

At the time, she told Economic Times that her research would be “driven by data and evidence” and that her first order of business was to help the central bank grapple with why its interest rate actions were hardly followed by commercial banks; a phenomenon known as ‘monetary transmission’.

Rajan rise

Mishra’s career has for the last few years followed in the footsteps of Rajan. She worked as an economist in the research departments of the IMF’s macroeconomic and development macro divisions until June 2012.

A few months after that she joined the “economic advisory council to the prime minister of India” and eventually became a senior economist in the office of the chief economic adviser shortly after Rajan was appointed to the position.

The Economic Times pointed out that her “ability to impress… Rajan with her research skills” led to the “lateral hire in the RBI’s monetary policy department as a ‘specialist adviser’, which is unprecedented”.

The Wire sent a detailed questionnaire to an RBI spokesperson asking about the circumstances of Mishra’s exit and the future of the central bank’s strategic research unit but has not yet received a reply. This story will be updated if and when the RBI responds.

Lateral talent at the RBI

Economic commentators have noted that Mishra is part of a group that are “some of the best macroeconomists doing work on India”

It is unclear at this point where Mishra plans on continuing her work, although sources with second hand knowledge of the matter pointed out the economist is likely heading back to the IMF.

What does this mean for the lateral hiring of talent at the central bank? Experts point out that it was during Rajan’s tenure that the idea that new talent must be hired from outside was firmly solidified, although many previous governors were also optimistic about tapping into an external talent pool.

Shortly after Rajan became RBI chief, the central bank’s board floated the idea of creating the additional post of “chief operating officer”. However, this idea was rejected quickly by the finance ministry, with the government asking for “more consensus” to build around the idea.

Where does the current governor stand? By all reports, Patel still plans on enacting major organisational changes and analysts point to the hiring of deputy governor Viral Acharya and the central bank’s new chief financial officer as proof that the current RBI governor favours lateral hiring.

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