“Poor Man’s Rajan” Quits As RBI’s Deputy Governor - Viral Acharya Will Return To His Lucrative Sinecure In Academia
“Poor Man’s Rajan” Quits As RBI’s Deputy Governor - Viral Acharya Will Return To His Lucrative Sinecure In US Academia Reserve Bank of India Deputy Governor Viral V Acharya. (Horacio Villalobos/Corbis via Getty Images)

The RBI deputy governor Viral Acharya has resigned six months before the scheduled end of his term, Business Standard reported.

Acharya, who joined the RBI on January 23, 2017, for a three-year term, is rejoining New York University Stern School of Business (NYU Stern) as CV Starr Professor of Economics. in August when the new academic season is set to commence.

Acharya’s brusque and controversial speech emphasising the need for RBI’s autonomy hit the headlines in October last year and was widely viewed as tan attempt to bring out the long simmering tensions the Union government and the central bank over a host of issue including the extent of RBI’s reserves.

Delivering the AD Shroff Memorial Lecture in Mumbai, an unrestrained Acharya threw caution in to the wind and warned of the ‘potentially catastrophic’ consequences of interference on the government’s part. “Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite (an) economic fire, and come to rue the day they undermined an important regulatory institution,” he noted

In that speech, which was seen as uncharacteristically belligerent for a central banker, Acharya made pointed mention of major friction-points between the two to emphasise that the RBI is constrained by lack of autonomy in several areas. Among the issues he red-flagged was the proposal to create a separate payments regulator where the RBI will have only limited say; the other is its limited powers to discipline and act against erring public sector banks; and the third is the constant government demand for more dividends.

Drawing a cricketing analogy, Acharya claimed that the RBI is playing a test match (implying that it is in a better position to secure the economy’s long-term interests) while the government is playing T20 game (seeking additional resources in the short-term according to its political timetable).

Many observers viewed Acharya’s outburst as orchestrated on behalf of the then governor Urjit Patel, who eventually quit a few months later.

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