The reasons for the exit of the RBI’s youngest deputy governor, Viral Acharya, before the end of his term is aptly reflected in a cartoon in this newspaper showing two parrots on the RBI's official logo instead of the tiger that depicts its autonomous position, indicating that the government wants officials to parrot its line. What is surprising is why he didn't resign along with governor Urjit Patel did over the government's interference. It was Mr Acharya who had set the ball rolling last year when he spoke on the need for the RBI's autonomy, warning of serious consequences.
Interestingly, the trigger for the latest discord between the government and the RBI is the tight regulatory and supervisory reins the central bank has announced for Non-Banking Finance Companies (NBFCs). The RBI must recognise that providing financial stability, that's its objective, means strengthening the economy. To this extent it's in sync with the government. With the economy in a slowdown mode and the banks on a weak wicket, the government wants credit flows to and from NBFCs that are the backbone of finance for the medium, small and micro sectors. They contribute almost 20 per cent of the total credit provided.
The exit of top officials like former chief economic adviser Arvind Subramaniam and Niti Aayog chief Arvind Panagariya are symptomatic of the systematic emasculation of various autonomous economic bodies by the Narendra Modi government. Its latest move to weaken and dilute the stature of the Securities and Exchange Board of India by naming joint secretaries to the Sebi board, instead of the usual secretary-level choices, will be watched with the utmost concern.
