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Nothing Personal About Viral Acharya, Urjit Patel’s Exit. Viral Can Now Pick Up His Guitar

Author: Srikanth Godavarthi/Wednesday, June 26, 2019/Categories: Exclusive

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Nothing Personal About Viral Acharya, Urjit Patel’s Exit. Viral Can Now Pick Up His Guitar

Viral Acharya's early exit as RBI deputy governor did not come as a surprise to many, at least not to those who closely followed the growing differences between the central bank and the government. The writing was clearly on the wall.

Acharya, a real rock-star who co-authored research papers with former RBI chief Raghuram Rajan, cited "unavoidable personal circumstances" for his decision to quit the central bank. But much before him, Urjit Patel too cited "personal reasons" for exiting the RBI as its governor. In both the exits, there was nothing "personal". Indeed, the circumstances that led to their resignations were perhaps "unavoidable". Like Rajan, both of them had put up a tough fight against the government's growing interference in the RBI's autonomy.

Rajan, often referred to as rock star, was one of the earliest in the RBI's rank and file who did not see eye-to-eye with the government on prickly issues ranging from easing interest rates to easing lending curbs on public sector banks brought under the Prompt Corrective Action (PCA) by the RBI. Probably, not the last nail in the coffin was the government's insistence that the RBI part with its surplus cash reserves in order to boost the government's finances. Tensions had been steadily growing between the Mint Road and the Raisina Hills since. Rajan refused to be seen as "the cheerleader" of the government and its policies. "Our job is to give people confidence in the value of the rupee, in the prospects of inflation, and having established that confidence, create a longer-term framework for good decisions to be made. Every time an exporter comes to me and says that stability has been very valuable for us to make decisions, that reinforces my view that our main role is not to act as cheerleaders," he noted (as reported in mainstream newspapers) in 2016 soon after macroeconomic data was released.

It's another matter that its not just Rajan, even the former chief economic advisor Arvind Subramanian did not agree with the government on GDP growth numbers. In a research paper, Subramanian noted that the GDP between 2011-12 and 2016-17 was overstated by about 2.5 per cent. A year after the BJP-led government was formed in 2014, Rajan at a speech in Goa probably referring to Modi had cautioned, "His was a strong government, but Hitler took Germany efficiently and determinedly on a path to ruin, overriding the rule of law and dispensing with elections." When India was seen as a bright spot in a slowing global economy, Rajan remarked "in the land of the blind, the one-eyed is a king."

The public spat between the government and the RBI was not limited to the hawkish Rajan. Rajan's successor Urjit Patel may not have been too loud on thorny issues bothering the RBI but was not silent either. The 'silent sufferer' soon locked his horns with the government over a range of issues including interest rates, bailing out SMEs and easing restrictions on PSBs under PCA. The Modi government wanted the RBI to lower interest rates to give impetus to growth, 'the dove' Urijt Patel too refused to toe the government's line. Patel who took over as the 24th governor of the RBI on September 5, 2016, had the shortest tenure since nearly two decades.

Patel's protege Viral Acharya had also made his position clear on undermining the autonomy of regulators which he said could be disastrous if compromised. Acharya, who has written extensively on issues related to bankruptcy codes and inter-bank market liquidity, in his speech 'The importance of the independent regulatory institutions - The case of the central bank' in 2018, warned of investors' wrath if the RBI's autonomy is compromised. "A government that does not respect the central bank’s 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 had said in that speech.

Viral's 'acharya' was Rajan when he was the chief economist at the International Monetary Fund when they together authored research papers. A musician at heart and a big fan of the Burmans, Acharya refused to dance to the drumbeats of the government.

Acharya will now head back to the New York University where he started an Indian film music band 'Surbahaar'. Probably, he would find solace in strumming his guitar and crooning his 'Yaadon ke silsile' to rather forget his days in the RBI as its deputy governor.


Number of views (4110)/Comments (11)

11 comments on article "Nothing Personal About Viral Acharya, Urjit Patel's Exit. Viral Can Now Pick Up His Guitar"

CV Kumar

6/26/2019 1:53 PM

Acharya is a real Rockstar. Left the RBI board Rocking. Shaktikanta Das will soon write his own Das

kapital after leaving the RBI sooner or later.

Madhusha chinnam

6/26/2019 4:42 PM

Like a musician, Viral chose to sing a different tune when the government was increasingly interferring with the RBI's affairs. The high-profile exits at the RBI is unlikely to stop anytime soon what with the dictatorial attitude of the government


6/26/2019 4:42 PM

His abrupt decision to quit RBI is because of his stance on reaffirming the RBI's independence

V. Chandrasekaran

6/26/2019 7:00 PM

They may be great economist but they cannot impose their will all the time. They are heading RBI in India. Their economy may suite advanced countries like US etc. In India they have to co-operate with the Government As government has to support the people by giving financial assistance through Mudra etc. so that the government come again in the election.


6/26/2019 7:34 PM

Raghu Rajan, Patel and Acharya have something in common. all the three were upfront about RBI's independence. Cleaning up of the NPA mess and their adamant posture on interest rates were the key issues that did them in


6/26/2019 7:36 PM

Well, no one quits such high-profile jobs on personal grounds. I am sure it must have been definitely unavoidable circumstances


6/26/2019 7:43 PM

The government must guard the integrity of RBI. The exit of Rajan, Urjit Patel and now Acharya reflects on non-performing asset government


6/27/2019 4:55 PM

In the growing tussle between the government and the RBI on several issues like lowering interest rates and sharing of surplus cash reserves, the government is losing its credibility. Resignations of renowned economists and bankers doesn't reflect much on the government. Modi government needs to fix this.


6/27/2019 4:58 PM

Instead of attempting to take away the RBI's autonomy, the government should focus on bringing back the loot and scoot gang like Nirav Modi, Mehul Choksi, Vijay Mallya and Lalit Modi.


6/27/2019 5:00 PM

Too many renowned economists are quitting prematurely, including the likes of Urjit Patel, former CEA Arvind Subramanian and Niti Aayog's Arvind Panagariya. This shows the government wants to flex its muscles. Too much of interference can be detrimental to economic growth, not to speak of the government's credibility

Bhanutej reddy Ragi

6/27/2019 6:29 PM

This is nothing but politics of economics

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