Remember, you heard it first from Rajan! ⚠️
Raghuram Rajan, Urijit Patel and now Viral Acharya. Each of these officials left their posts at the Central Bank citing ‘personal reasons’. However, it is no more just speculation that their exits are NOT associated with their love to return to academia in the States (in case of Rajan & Acharya). There are greater (more powerful) forces at play here.
It is reported that Acharya’s resignation, which comes 6 months before his term ends was intensified by the repo rate cut announced by governor Shaktikanta Das, even when he (as the head of the monitory policy committee) had strongly advised against it.
While economic decisions are always debatable (unless we witness a major collapse), Acharya’s open criticism of RBI’s autonomy being sacrificed (over the last few months) highlights a deeper issue that is perfectly summarised by Andy Mukherjee from Bloomberg:
“If perfect ideological consonance with a fiscally irresponsible government (a structural feature of India regardless of who’s in power) becomes a prerequisite for a leading role at the monetary authority then one day, when markets are less forgiving, India will find itself lacking in credible institutions“