 Hello and welcome to NewsClick. Today we are going to be talking about a very significant national development that has taken place. So the RBI, the Reserve Bank of India's youngest deputy governor, Viral Acharya has put in his papers. And what could it actually mean? Everywhere the media is talking about why he has resigned, we are going to be talking about that and a lot more with senior journalist Paranjoy Guha Thakurtha. Paranjoy first thinks first, he was always a non-confirmist. So why did he actually resign now and did he get on the wrong side of the government? Well, we can only speculate about why he's put in his papers six months before his term was to end, which was in February 2020. Now it's a fact that he's been the youngest deputy governor of the Reserve Bank of India for 45 years old. He's got a wife and an 11-year-old son in New York. He's going back to his alma mater. He studied at New York University's Turn School of Business. He was professor of economics there. This is after he left the Indian Institute of Technology in Mumbai. Now why did it happen? Now some of his differences with the government are in the public domain. What are these? He had been appointed by the former governor, that's Urjit Patel. Urjit Patel put in his papers, he resigned on the 10th of December, the day before the assembly election results for Madhya Pradesh and Rajasthan and Jathisgarh were declared. And he was soon thereafter succeeded by Shaktikanth Das. Now what had happened is, let's look at what these differences were. The first evidence that Viralacharya, as well as Dr. Urjit Patel, his mentor, weren't exactly saying eye to eye with the government of the day, was when Viralacharya gave a public speech. This was in October of 2018. It was the A.D. Shroff Memorial Lecture. Let me quote a few lines from it. What he said, that governments that do not respect central bank 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. That the government wasn't happy with, this was very very evident, soon thereafter. Why? Mr. Subhash Garg, who was Secretary of Economic Affairs and the Ministry of Finance, he tweeted. He said the rupees trading at below 73 to a dollar, Brent crude oil prices are below 73, the markets have gone up by 4%, the bond deals are below 8%, Roth of the market's question mark. So there was clearly a certain tension. But more than that, I mean, the fact that Viralacharya was a nonconformist was known. It's not just that he often didn't have to, when there was no formal meeting, he didn't wear a suit and a tie in Mumbai's heat, you know, 40 degrees. He didn't even live in the fancy bungalow in Mumbai's napioncy road, which was allotted to a deputy governor. And instead he chose to remain with his family in Villepalle. And he was supposed to be one of those guys in formal person. He would, with his 11 year old son, he would go and play soccer with the neighborhood children. But no, on a more serious note, I mean, there were some major differences. What were these? Firstly, we know, and let's go step by step, let's go backwards in a sense, there was a monetary policy committee meeting on the 6th of June. In the minutes which became available about two weeks later on the 20th of June, it has been recorded that Viralacharya had highlighted what he described as the upside risks to the Reserve Bank of India's projections on inflation. And he apprehended there would be a fiscal slippage. Now, why? He said that, look, you can't take the fiscal deficit the way the government does, you must include in it public sector borrowing requirements. He said there could be a 0.5% slippage in the fiscal deficit. He said there could be a 10% increase in oil prices, all of which would actually result in the Reserve Bank of India's calculations going alright. That's not all. It is believed that he was one of the strong defenders of the prompt corrective action that was proposed on weak banks, including restraining them from loaning, advancing fresh loans. And I think the Reserve Bank of India's dissension on a government committee on this issue of payments and settlement laws and rules were also evident. So, all these issues, there was tension between the Central Bank and Apex Monetary Authority and the Ministry of Finance. Now, once again, you can say there's nothing new. There should be some tension. But there's more than that. Yeah, there are some ideological... I'll come to the ideology a little later. You know, remember this was the time that the government of India actually threatened to use Section 7 of the Reserve Bank of India. Yes. It has never been used, which actually empowered the board to direct the affairs of the Central Bank. This has come at a time when the Bimal Jalan Committee has sought more time to present its report. It was supposed to submit its report in April. It sought more time on how the surplus funds of the Reserve Bank of India are to be transferred to the government. Now, it is believed that Mr. Charya was not exactly in favour of, as they say, allowing North Block to raid the Treasury. I'm using this with inverted commas. But from the time, Ujit Patel suddenly resigned as the governor of the Reserve Bank of India, I think the writing on the wall was clear. That his protege, in a sense, and the person who he was responsible for bringing to the Reserve Bank of India would soon be leaving. Very few people were surprised, you know. So he was appointed in December 2016 and he chose to quit. Yeah. And this is coming... This is not new, like you said. So this is... We've seen a slew of resignations after resignations from Ujit Patel to Raghuram Rajan and there are a lot more... A lot more. A lot more. In fact, a number of independent economists who were recruited to prominent positions by this government, by the Modi government now in its second term... And mind you, they were all ideologically inclined towards the ruling party. I mean, it's not as if they've been left of center. They were right-wing in their views. You can call them neoliberal. I mean, you can use any description as you like. One of them, let's name some of them. Yes. The vice chairman of the Niti IO, which replaced the Planning Commission, Arvind Panagaria. He was one person who lived... As you mentioned, two Reserve Bank of India governors, Dr. Ujit Patel, Dr. Raghuram Rajan, economic advisor, Arvind Subramaniam, who's got into a controversy with his recent paper about GDP growth numbers. Now, he too quit ahead of his term. So, in a sense, you can argue that many, many independent economists, even if they've been ideologically inclined towards the government, has not been comfortable because maybe they felt stifled. I'll give you one other reason. Swaminathan Gurumurti, a chartered accountant from Chennai, was appointed on the Reserve Bank of India's board on the 8th of August, 2018. Gurumurti is an ideologue of the Rajashtra Swamseh Vaksal. He's a moving force behind the Swadeshi Jagaran Munch. And though he's ostensibly a quote-unquote part-time and a non-official governor of the Reserve Bank of India, many felt that he exerted a lot of influence and sought to, you know, guide the manner in which the Reserve Bank of India is going. You know, Tamal Bhandupadai, who broke the story on business standard, he said that the meetings of the board of the Reserve Bank of India became longer and more acrimonious than before. And so, clearly, there was tension. And I don't think anybody can deny that. Whether that tension was inevitable, good, is another matter altogether. So now, how do you see the repercussions of these tensions in terms of the impact on the political implications of it and the economic implications of this? Look, this government wants people who toe the line. They don't want people who are independent. There have been former bureaucrats who, once they sat on that position, it became the head of that constitutional authority. They displayed a lot of, you know, what should I say, independence and autonomy, the differences of opinion that Dr. V. Veno Gopal Reddy had with the Ministry of Finance, with Mr. Chidambaram. The differences that Mr. Dhuvuri Subbarav had with Mr. Chidambaram are all recorded, are very, very well known. But I think this government doesn't broke dissent at all. My batchmate, Shakti Kanta Das, who has a master's degree in history, was always perceived to be not just a lawyer and a compliant bureaucrat. He was, in fact, the face of the government of India in the most controversial decision of its kind of December 2016 demonetization. And many, many, much later we know that there was no unanimity within the Reserve Bank of India board, the hurriedly convened board meeting to approve the government's decision. Though, of course, Dr. Ujith Patel went along with the government. So I think this particular government is very keen that the Reserve Bank of India, in fact, all institutions are pliant to the government's line. Talking about compliance to the government line, who do you see there are multiple names cropping up as the next successor or perhaps a compliant successor to Viral Acharya? Who do you see? Well, again, I can only quote my friend Tamal Bhandupada, who broke the story in business standard. He's mentioned two names, Sanjay Sanyal, Principal Economic Advisor in the Ministry of Finance, and Michael Patra, who is the Executive Director of the RBI. And he's also a member of the Monetary Policy Committee. So we have to wait and watch what happens. I really wouldn't guess. I wouldn't venture a guess as to who is going to replace him as Deputy Governor. But to go by that same report of Tamal, he says that another Deputy Governor whose term ends in early July, Mr. N. Vishwanathan, he's likely to get an extension of his term. All right. So on that note, we will be following this story. It's a very interesting development that has taken place. And on news click, we'd be following as to who becomes the next Deputy Governor of the Reserve Bank of India. Stay tuned. Thanks for watching.