HYDERABAD: On a summer afternoon in 2017, we were seated in the lounge at the RBI’s sacred 18th-floor on Fort Road in Mumbai for an informal chat with deputy governor Dr Viral Acharya.
The proposed interaction was already 30 minutes behind schedule and as we sat in a library-like silence awaiting our turn, the most unexpected happened.
Acharya himself walked in to greet us, apologised sincerely for the delay — which by any Indian standards was nothing — and after exchanging pleasantries, made two requests.
Could we wait another 30 minutes and would we be kind enough for a group chat (with another journalist) instead of one-on-one? Outrageous for sure, but Acharya’s simplicity was as persuasive as his CV.
Sadly, Acharya decided to quit six months ahead of his three-year term, which was to end next February. In a statement Monday, RBI said, “A few weeks ago, Dr 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.”
Traders, however, shrugged off the move, with some like SBI Research concluding that it was unlikely to roil the markets. RBI sources told Express that the issue was very much on the table, but the government must act quickly to find a replacement.
India’s youngest deputy governor joins the growing tribe of economists and technocrats leaving their posts after locking horns with the government.
Importantly, Acharya’s resignation puts a chill on NRI appointments in key positions, with critics blaming them for not having a fingertip feel of ground realities.
Informal interactions with Acharya inevitably veered towards the bad loans crisis, a topic he had a good handle on and his solutions are the legacy he’s leaving behind.
The Dr Urjit Patel-Acharya duo tightened regulations on toxic loans, raised provisioning norms, was ruthless about under-reporting of NPAs and forced full public disclosures, upsetting several and drawing criticism.
In contrast, Acharya lacked this level of a grasp on broader economic needs, and along with Patel, he pursued a tight monetary policy despite industries’ pleas.
With time, differences grew deeper, and hell broke loose when the government claimed ownership on RBI’s surplus reserves.
Stormy board meetings followed, triggering the dramatic exit of Patel last December, taking his deputy in tow six months later.
Acharya has authored several economic papers that won him praise. Perhaps, wanting to convert his economic ideas into real-world solutions, he voluntarily applied to RBI when Dr Raghuram Rajan was at the helm.
He was eventually roped in when the deputy governor’s position fell vacant after Patel was elevated as Governor. He joined when RBI was in its most turbulent phase and after walking on eggshells for over two years, he’s giving up the battle.
This brings us to the question: if dissent always leads to exits, isn’t it the end of constructive thinking? Should external appointees be allowed to leave mid-way, causing both avoidable embarrassments to the credibility of the government and the RBI?