The RBI's deputy governor resigned six months before end of tenure following other such goodbyes, indicating a troubled equation with the government
The premature exit of the Reserve Bank of India’s (RBI) deputy governor, Dr Viral V. Acharya, six months prior to the end of his tenure once again raises the concern over the inability of policy makers to work with government officials.
Acharya’s exit is not a stray case. Before him, Arvind Panagariya of Niti Aayog, the Chief Economic Advisor Arvind Subramanian, former RBI Governor Urjit Patel and his predecessor Raghuram Rajan have all decided to end their tenures prior to their completion.
“There is clearly a pattern [to these exits]. Those working from outside of the Indian government find it difficult to work [with the government],” says Hemindra Hazari, an independent banking analyst who writes for Singapore-based research platform Smartkarma.
Acharya is the C.V. Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern) and has decided to return to the United States, where he teaches, to be with his family. Acharya had joined the RBI as deputy governor in January 23, 2017, but quit six months before his tenure was to end.
In October 2018, Acharya surprised all by calling for the need for autonomy for a central bank from a government. He said, at a public forum, that governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution.
“While a lot of what Acharya spoke about in that October speech might have an element of truth, I have little sympathy for him. The RBI, as a central bank, is subservient to the government. He should have resigned earlier [if he was peeved]…. You can’t be like an independent commentator in position of office and make statements which are destabilising,” Hazari told Forbes India.