Mumbai: Reserve Bank of India Deputy Governor Viral Acharya resigned six months before his term was due to end, the Business Standard reported, following the unexpected departure of the governor in December.
Acharya, who was in charge of the monetary policy department, will return to New York University as an economics professor in August instead of February 2020, the newspaper reported Monday, citing him. A RBI spokesman said he was unaware of the development and Acharya didn’t immediately reply to a message from Bloomberg seeking comment.
A monetary policy hawk, Acharya joined the RBI in January 2017 for a three-year term. His departure is the second high-profile exit after Urjit Patel suddenly resigned as governor in December amid a clash with the government about the central bank’s independence.
Those differences — on lending rules to interest rates — were first brought to the public’s view by Acharya in a speech in October. At the time, he used the example of the financial market meltdown in Argentina in 2010 to warn about the dangers of a government meddling with the central bank’s independence.
After Patel quit, the RBI under Governor Shaktikanta Das has cut interest rates three times and given up its tight policy stance. Acharya was the only deputy governor on the six-member monetary policy committee, and his departure leaves the door open for more easing to support a slowing economy.
Sovereign bonds advanced, with the yield on benchmark 10-year notes falling 5 basis points to 6.82%, on expectations Acharya’s departure may pave the way for deeper rate cuts. The rupee was little changed in early trading.
Acharya’s exit wasn’t a complete surprise given the friction with the government, said Nomura Holdings Inc. analysts Sonal Varma and Aurodeep Nandi. “The composition of the MPC will likely become incrementally more dovish, in our view, as Acharya stood on the more hawkish side of the policy spectrum,” the analysts wrote in a note.
At the June MPC meeting, Acharya voted for a rate cut, but flagged risks to inflation coming from rising government debt.
Read: India’s Public Finances Are Getting Worse, Central Banker Warns
Business Standard cited people it didn’t identify as saying Acharya handed in his resignation a few weeks before the RBI’s June monetary policy committee meeting. When asked for further comments, he told the newspaper: “A schoolteacher once told me: ‘When your work speaks for itself, do not interrupt.”’
N.S. Vishwanathan, a deputy governor whose term is due to end in the first week of July, is likely to stay on for another term, the report said.
Michael Patra, executive director at the RBI, and Sanjeev Sanyal, principal economic adviser at the Ministry of Finance, are among possible successors to Acharya, the report said. Patra is already an MPC member along with Governor Das. The other three officials on the MPC are external members well known in the field of economics and management.
Also read: Is Viral Acharya speech just another fight or shows Modi govt’s inability to work with RBI?
Why didn’t he stay for just six more months? Did he believe that our economy is so precariously poised that the skies are going to fall within just six months, so he better be out of the mess before that? Or he wanted to make a point, to make his displeasure known while he still had time, because after his tenure got over “they” may anyway not renew his contract?
I think the latter is the answer. But the point is, why are serious economic brains showing displeasure with the way Indian economy is being run? Amartya Sen, Raghuram Rajan, Urajit Patel, Arvind Panagadia decided to go back to academics, and now Viral Acharya. In between Arvand Subramanian too. Is Modi a super-economist and all these guys are merely having a ego hangup?
When one looks back, one gets a sense that the country didn’t get any great benefits from getting these Indians who excelled in American academic system, be it Rajan, Patel, Arvind or Acharya. They had their objectives to satisfy and they used the stint here to further their own interests. They might not have sought US citizenship but that’s not enough for nationalist credentials. By their loose talks outside area of their duty, they created unnecessary difficulties for the government. Once Das has been appointed, RBI is working quietly and quiet well. Hence, it appears that we should forget about our fascination for these indian American johnnies and look to our own economists for RBI and Fin Min. Good wishes to Viral who is now free to send dire warnings to Modi from New York. One exception to the above was the other Arvind, ( Pangariya) who did a good job during his stint here.