Renowned Indian Economist Viral Acharya has resigned from his post of Deputy Governor six month before the end of his term, stating that he was not expecting his term to be renewed in any case. Acharya had joined the central bank on January 23 last year after Patel was elevated to the post of governor in September 2016.
He is neither a common man nor his achievements can be concluded in this piece of story but one can surely estimate his capabilities and brilliance with the marks he scored in IIT JEE where he was ranked ‘5’ in 1991.
The JEE AIR 5 went on to win the President of India Gold Medal for the highest Grade Point Average (GPA) among 350 students on his graduation in 1995 and the President of India Gold Medal for the best academic and overall proficiency at IIT.
“Acharya may not be JEE AIR 1, but he was very brilliant. There were rumours in our department about a whizz kid from the CSE department and most of the lectures and students in that batch were in awe with this whizz’s knowledge, intelligence and ability. Further, most of the students in his batch avoided the optional courses taken by this whizz because he would always top the class and most others would fail due to the relative grading system followed by IITs. He was also one of the lead players in IIT Bombay’s cricket team. As an outsider I felt there was a huge difference between this whizzes and others in the institute at that time,” said a classmate of Viral Acharya, MG Annad from IIT Mumbai.
He finished his graduation in 1995 from Indian Institute of Technology Mumbai, and then went on to do his Ph.D. in Finance at the prestigious New York University’s Stern School of Business in 2001. A Ph.D. in Finance six years after graduation. He last held the C.V. Starr Professor of Economics chair at NYU Stern before returning back to India.
Viral Acharya’s achievements
Acharya has prodigious achievements and to make account of his accomplishments, skills, and proficiencies is a task in itself. He was the academic director of the Coller Institute of Private Equity at LBS (2007-09) and a senior Houblon-Normal research fellow at the Bank of England (summer 2008), according to a bio available on the NYU-Stern website.
He has been a member of an advisory scientific committee of European Systemic Risk Board (ESRB), economic advisory committee of the Financial Industry Regulation Authority (FINRA), advisory committee of Financial Sector Legislative Reforms Commission (FSLRC) of India, International Advisory Board of the Securities and Exchange Board of India, or Sebi.
He has also been on the advisory council of the Bombay Stock Exchange (BSE) Training Institute, and Academic Research Council Member of the Center for Advanced Financial Research And Learning (CAFRAL, India); and has been an academic advisor to the Federal Reserve Banks of Chicago, Cleveland, New York and Philadelphia, the Board of Governors and the Bank of Canada.
In addition, he is a research associate of the National Bureau of Economic Research (NBER) in corporate finance and research associate of the European Corporate Governance Institute (ECGI).
Controversies enveloping Viral Acharya
It’s not the first time when central Bank (RBI) and government had conundrum of different issues but, earlier, such conflicts were resolved quietly because of proper understanding of the RBI governors and finance ministers.
This time, the controversy sparked and went on to smear when Deputy Governor of RBI, Viral Acharya became vocal about the freedom of RBI and said that the risks of eroding the foundation of the central bank’s independence could be potentially disastrous and turned the spotlight on to not curb on RBI’s hard gain independency.
On RBI’s independency once former RBI governor YV Reddy had jokingly said, “Yes, I’m independent and RBI is an autonomous institution. This, I am saying after getting permission from the finance minister.”
After viral Acharya statement Finance Minister Arun Jaitley blamed RBI of mounting NPI during 2008–2014, and after that this whole narrative came in public domain. Just after few days, Secretary of Departments of Economic Affairs, Subhash Chandra Garg, also stepped in this game in Trumpian style through his tweet by clearly referring Acharya’s remark.
“I am absolutely proposing either explicitly or implicitly that we separate the healthy parts of the troubled banks from the healthy parts. Either as a bad bank which has those bad assets left in the original balance sheet once you have separated the good parts, or you could run it to full maturity, so we are not looking for sellers or buyers. Or you could actually pool all the bad parts together and make an asset restructuring company that looks for buyers for these assets,” said Viral Acharya in an interview.
However, the Central government is extremely upset with Viral Acharya for bringing the rift between the duos in public domain. The government sees it as a threat to the country’s image internationally and a risk for the potential foreign investors.
Whereas, the RBI Deputy Governor, Viral Acharya, in a speech to the top industrialists cited the example of Argentine government, which faces similar situation in 2010 when the government intervened with its Central Bank’s affair which had led to a surge in bond yields that badly hurt the South American economy.
“Government that do 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,” said Acharya in the speech.