Viral Acharya was appointed as one of the four deputy governors at the central bank in December 2016
Highlights
- Viral Acharya's term was scheduled to end in February next year
- He was appointed as one of four deputy governors at RBI in December 2016
- RBI had last year denied speculation about Viral Acharya leaving early
Viral Acharya, Deputy Governor of the Reserve Bank of India (RBI), has resigned, citing "unavoidable personal circumstances". Mr Acharya, whose term was scheduled to end in February, conveyed his decision to the central bank in a letter. "Consequential action arising from his letter is under consideration of the Competent Authority," the RBI said in a statement today. The 45-year-old's resignation comes months after his former boss Urjit Patel stepped down as RBI Governor, amid speculation of a rift with the government. That rift had exploded when Viral Acharya, in a scathing speech just a couple of months before that, had warned of "risks of undermining the central bank's independence" as "potentially catastrophic".
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The RBI, in its “statement on media reports”, said Viral Acharya wrote to it a few weeks ago, saying he would be “unable to continue his term as a Deputy Governor of the RBI beyond July 23, 2019”.
He is returning to the New York University Stern School of Business as an Economics professor in August, the Business Standard newspaper reported earlier today.
The RBI had, in December last year, denied speculation about Viral Acharya also leaving early after Urjit Patel resigned as RBI chief. Mr Patel stepped down as governor in December 2018 amid growing differences with the government over a range of subjects including the central bank's autonomy. Shaktikanta Das was appointed governor shortly after Mr Patel quit.
The rift between the government and central bank had surfaced earlier in October after Viral Acharya's candid speech warning that undermining the RBI's independence could be "potentially catastrophic".
"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," Mr Acharya had said in the speech that was widely shared on social media.
Those comments were seemingly triggered over the government reportedly pressuring the central bank to release reserve cash kept in RBI coffers to boost the economy in an election year.
Mr Acharya was widely known for having a hawkish stance on monetary policy, and economists expect his exit to lead to a more dovish Monetary Policy Committee. "At the margin, the composition of the monetary policy committee will likely become incrementally more dovish, in our view, as Dr Acharya stood on the more hawkish side of the policy spectrum,” Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note.
The opposition, which had blamed the government for Urjit Patel's exit, accusing it of trying to destroy institutions, hit out the centre today. “Govt changes, but issues of Economic Manhandling remain! RBI Dy Guv, Viral Acharya adds his name to the long list of experts who attempted to show the ‘Mirror of Truth' to BJP regime. 4 Economic Advisors,2 RBI Guvs & a Niti Aayog VC has resigned earlier!” Congress spokesperson Randeep Singh Surjewala tweeted.
Mr Acharya was appointed as one of the four deputy governors at the central bank in December 2016, after Urjit Patel was promoted to be the governor.
Meanwhile, an RBI panel deciding on guidelines for transfer of the central bank's surplus funds to the government has further delayed submitting its report, news agency Reuters quoted an official as saying. Headed by former RBI Governor Bimal Jalan, the panel was originally supposed to submit the report in April.
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