Confirming his resignation, the RBI said, “A few weeks ago, Acharya submitted a letter to the RBI informing that due to unavoidable personal circumstances, he is unable to continue his term as a Deputy Governor of the RBI beyond July 23, 2019.”
Reserve Bank of India (RBI) Deputy Governor Viral V Acharya, a strong votary of the central bank’s independence and seen as having differed with Governor Shaktikanta Das on the inflation trajectory, growth prospects and policy rates, has resigned from his post, a little over six months before his term was scheduled to end
Acharya, 45, joined the RBI in January 2017 and was its youngest Deputy Governor, post economic liberalisation, in charge of the monetary policy department. He had differed with Governor Das on inflation issues and repo rate reduction in monetary policy reviews this year. Acharya, who will be returning to New York University as CV Starr Professor of Economics, was not expecting another term as he had supported former Governor Urjit Patel in the RBI’s feud with the Centre on several issues in late 2018, said a top-level source.
This is the second high profile resignation in the last six months at the RBI. In December 2018, Governor Patel had resigned nearly nine months before the end of his term over differences with the government. The RBI is now left with three Deputy Governors N S Viswanathan, B P Kanungo and M K Jain. And with Viswanathan’s term ending next month, two Deputy Governor posts will be vacant.
On October 26, 2018, differences between the RBI and the government came out in the open when Acharya, in a stinging criticism, reminded the government about the need for an independent central bank, warning 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”.
Acharya’s remarks came after the government reportedly issued directives to the central bank under Section 7 of the RBI Act — a provision under which the government can give directions to the RBI to take certain actions “in the public interest”.
Then RBI Governor Patel had differed with the government on several issues, including transferring surplus to the government, more credit flow to small units, easing of curbs on public sector banks and funding support to the NBFC sector.