Mumbai: Viral Acharya who takes charge as Reserve Bank of India deputy governor on Friday has hard times to deal with as incharge of monetary policy unit. He will head the crucial Monetary Policy Committee, formed to evaluate benchmark repo rate.
Acharya, 42, joins central bank at a time when questions were raised over institutional integrity of apex bank as it was not clear as to who was instrumental in recalling notes for a long period of time. The question of whether it was government or the RBI behind the sudden decision was debated by experts for weeks.
Acharya will preside over the crucial Monetary Policy Committee, key institution tasked with work of assessing monetary situation to fix interest rates. He left his plum job of a finance professor at Stern School of Business, New York University to take up the more challenging role at central bank.
MPC under new governor Urjit Patel has reduced benchmark repo rate twice by 50 basis points at its first two meetings.
“India is at an exciting but challenging time,” Acharya had said in a statement posted on Stern website when his name first cropped up for the coveted job. “As one of the world’s fastest growing economies, India has the massive potential to become an economic powerhouse.”
Acharya as MPC chief has little time left. Central bank will meet in second week of February to announce new policy stance, and expectations are that the banker’s bank would go for a rate cut given the uncertain fiscal environment in country.
Notes ban wiped out 86 per cent of total currency in circulation leading to a cash crisis. Governor Urjit Patel briefed Parliament panel on bank’s measures on remonetisation. Patel told them over Rs 9.2 lakh crore worth of new valid legal tenders were already injected back into the system.
Acharya would also have to take into consideration presentation of Budget days before the central bank meets for a policy review. He in tandem with three other deputy governors with Patel at the helm will have to work on a new repo rate that suits post-Budget 2017 economic scenario.