Published: Tue, June 25, 2019
Markets | By Erika Turner

RBI Deputy Governor Viral Acharya has resigned, reports ‘Business Standard’

RBI Deputy Governor Viral Acharya has resigned, reports ‘Business Standard’

Viral Acharya, member of India's monetary policy panel, has quit to go back to teaching at New York University.

Acharya's parting shot last week was targeted at the government.

His three-year term was due to end in January 2020.

"Dr Acharya's departure is not a complete surprise, as frictions between him and the government on issues related to central bank independence had come to the fore", Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note.

Then, on October 26 a year ago, just three days after the RBI's board meeting, Acharya made a fiery speech on the importance of independent regulatory institutions, a topic he claimed had been suggested by Patel. According to the RBI Act, the central bank can have four deputy governors.

RBI said in a circular, "Reports have appeared in certain sections of the media that Viral V. Acharya, Deputy Governor of the Reserve Bank of India (RBI) has resigned from his post".

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He noted that overall public sector borrowing - which account for extra-budgetary resources and other off-balance sheet borrowings of central and state governments a "have now reached between 8-9 percent of GDP".

Acharya emphasised that undermining a central bank's independence is akin to committing a "self-goal" for any government.

Before Acharya, two previous RBI governors resigned before their term ended.

Acharya went public with his thinking on the sensitive topic of central bank independence during a speech at the peak of the run-ins between Mint Road and the Central government that culminated in Patel's departure on December 10 past year. It is also perhaps significant that Mr. Patel resigned shortly before the Bimal Jalan committee is to submit its report on whether RBI reserves could be transferred to the Centre or not.

Acharya's view has been that the RBI's monetary policy committee (MPC) needs to focus on ensuring that inflation is kept close to the target of 4 (+/-2) percent in a durable way countering the Governor Das's view for a repo rate cut in view of the economic slowdown.

The newly appointed Viral also comes from an academic background like Rajan and has also co-authored in the past at least three papers with the former RBI governor.

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