(Photo: Reuters)
(Photo: Reuters)

Opinion | The last dissenter calls it quits

Whether or not he is a casualty of Modi administration’s attitude towards our institutions, he'll be missed for his insights into monetary scenario

The premature exit of Dr. Viral Acharya, Reserve Bank of India’s youngest deputy governor in the economic liberalization era, signals the end of overt resistance within the bank to the government’s alleged attempts at cramping its autonomy. Some observers had expected Acharya to leave soon after Urjit Patel did, the RBI governor under whom deputy Acharya had been especially vocal in fending off the centre once the latter began eyeing its reserves for its own use. But he stayed on. Since a truce of sorts was struck between the central bank and the government, and a committee was set up to look into the matter of RBI reserves, many assumed that this point of friction was over.

Perhaps Acharya was seen to have gone too far in saying that an RBI bullied into doing the centre’s bidding risked setting off “a crisis of confidence in capital markets", as he said in a famous speech last October. The government, on its part, had waved Section 7 of the RBI Act in the central bank’s face to explain who had the final word on decisions. It was soon obvious that RBI could exercise independence only to the extent agreeable to the government. This had been the case for decades, but New Delhi’s 2015 plan to set the central bank an inflation target and let it run monetary policy freely had suggested far greater freedom for it.

As it turns out, the notion of RBI independence has various interpretations. Acharya’s version apparently had too few takers within the government, even if he has gained legions of fans for his views on what’s best for the economy. Whether or not he is a casualty of the Narendra Modi administration’s attitude towards our institutions, he will be missed for his insights into the monetary scenario, market responses and much more.

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