When Urjit Patel resigned in December 2018, it was a foregone conclusion that Viral Acharya will follow suit. The fact that he took six months to move on was a surprise.
I suppose Viral Acharya’s resignation is the last of the lot in Modi 2.0. There are not going to be any more Raghuram Rajan, Arvind Panagariya, Arvind Subramanian, Urjit Patel and of course Viral Acharya. Hence, it is necessary to take the learning from this episode to see what it entails for all the participants.
Viral Acharya and the likes
It is an admirable achievement that Viral Acharya did not throw in the towel immediately after Urjit Patel left. The guy really tried hard and he did hang in for six full months. Full credit to him on this. His commitment to his job and India cannot be questioned at all. Though it was never meant to work out for a competent and an independent-minded person like him and it did not.
The learning – You can only delay the inevitable, ultimately you will have to resign; unless you fall in line.
The departure of three people should put to rest the notion that the RBI is independent. There is no arm’s length distance from the Government of the day. Rather, it is just another extension of who the powers-to-be are. There is no need of archaic British era Section 7 or whatever to instruct RBI of what the Government wants. British Government might have needed it, not the Indian Government.
The learning – RBI is better served by the IAS, and not the highly trained and qualified economists. After all, the only qualification is to ask how high, when asked to jump by the government.
Viral Acharya said, “The governments that did not respect their central bank’s independence would sooner or later incur the wrath of financial markets”. What happened after the resignation of Urjit Patel? What happened after the appointment of Shaktikanta Das? I do not suppose the markets came to know about either. Leave aside the rage of the market, there was not even a blip.
The learning – Markets mirror the Indian State or is it the other way around? One thing for sure is that Viral Acharya would have learnt a bit more about the practicality of Indian markets and its opinion about economists who think anything other than reducing the interest rate.
The Government of India
GoI does like to put up the pretence that they value difference of opinion, a healthy debate on what is good for the country and competent people are indeed welcome to be a part of the Government. After all, they came up with the lateral entry scheme. The only point is that they will not find a better lateral entrant than Viral Acharya or Urjit Patel or Raghuram Rajan, for that matter.
The learning – Government of India will continue hiring lateral entrants with a pre-requisite mandatory qualification of toeing the government’s line and not having a mind of one’s own.
The Media and Us
It is a sad commentary of our media discourse when rather than the lament that the final barrier to the government’s whims and fancies fell, the media was either indifferent or took it as fait accompli. The public’s reaction was even more bewildering. People commented about Viral Acharya’s foreign connection, wanted him to go back sooner, saying that only Indians can serve India and outrightly looking down upon him.
The learning – We cannot identify a Shaktikanta Das from a Viral Acharya. We deserve what we get and we get what we deserve. We will continue to be where we are, what we are, who we are and all.
Indian State and professional expertise do not go hand-in-hand. With Arun Jaitley also out of the way, we are not going to see any more competent professionals getting hired who will have a mind of his own.
Long live Sanjeev Sanyal, Michael Patra, Amitabh Kant, K Subramanian and of course, Shaktikanta Das. The future of Indian Economy is in their hands. Even God cannot save India any more.