Viral Acharya’s RBI Resignation Is Part of a Larger Pattern

The RBI Deputy Governor’s resignation is not an independent event.

Viral Acharya was the first person to raise issues concerning RBI officials.

(Photo: The Quint)

Video Editors: Varun Sharma and Mohd Irshad Alam

The list of his accomplishments is so long that his CV is probably 14 pages. He graduated from IIT Bombay and went on to study at New York University. He was awarded the President's Award and worked at London Business School and Bank of London. The self-proclaimed poor man's Raghuram Rajan, Viral Acharya resigned as the Deputy Governor of RBI six months before the completion of his term. Viral Acharya was the first person to raise issues concerning RBI officials. It is believed that Viral found himself alone at the RBI. Remember what he said in October 2018?

“The government that allows Reserve Bank to work with freedom gets loans on lower interest rates and support of global investment community. Such a government enjoys a longer tenure in power.”

Viral Acharya, Fmr Deputy Governor, RBI

The govt wanted to implement Section 7 of the RBI Act. It would allow the govt to control the RBI directly. Against the same, Acharya wanted the RBI to remain autonomous. Now the key question: Is acharya's resignation an independent event?Let's try to trace the series of events that led to his resignation. Former RBI Governor Urjit Patel was the current government’s appointment.

But is Acharya’s resignation an independent event?

His term was to end in September 2019 but he resigned in December 2018. From demonetisation to interference in the day-to-day functioning of the RBI, Urjit was unhappy with the govt's meddling. Now, let's recall Raghuram Rajan's farewell. Rajan, who achieved a milestone in inflation control had announced in June 2016 that he didn't want a second term as the RBI Governor. He was also opposing the govt's inference in the RBI.

Officials stepping down over disagreements with the government isn’t limited to the RBI, though. 

Another big name in India's economic infrastructure, former chief economic advisor Arvind Subramanian also resigned one year before his tenure was supposed to end. Recently, he has raised questions about the GDP data released by the government. As per Subramanian's report, the GDP data released for the years 2011-2017 are overestimations by at least 2.5%. He even called demonetisation a destructive step.

Arvind Pangariya was the NITI Aayog's vice chairman. His story is similar. Pangariya, who set up the organisational structure of NITI Aayog submitted his resignation 3 years before the end of his term. All in all, the current dispensation has seen many economists resign because of their differences with it.