Viral Acharya's resignation: RBI union moots collegium of experts to select governors, deputy governors

Announcement of deputy governor Viral Acharya's resignation has once again encouraged demands for neutrality as well as the independence and autonomy of the Reserve Bank of India (RBI), whose employees association has called for a collegium of experts to select new governor and deputy governors so as to ensure autonomy of the central bank, a day after this development. 

In a statement on Tuesday, the All-India Reserve Bank Employees Association said, "Such sensitive and very important positions at the central bank must be decided not by a few ministry officials, even not by the finance minister himself, but by a collegium of experts comprising former governors, other prominent central bankers and economists." 

It further said that only such a body can properly assess and judge the competence, knowledge and experience of the individuals for such posts. The association was quoted as saying, "Only such appointments can ensure neutrality as well as the independence and autonomy of the central bank, and also prevent undesirable political and purposive interference in such nominations." 

Acharya, the youngest ever deputy governor, resigned from his position a few weeks back citing "unavoidable personal circumstances" and will be leaving the Mint Road office on July 23, the RBI said in a brief statement on Monday. As per the Section 8 of the Reserve Bank of India Act of 1934, the governor and deputy governors are appointed by the government. Viral Acharya resigned six months before the scheduled end of his term on January 20 next.

The union expressed regret on the premature departure of Acharya and said the personal reason cited by the deputy governor does not tell the whole story, claiming "Deep and prolonged differences with the finance ministry on the autonomy and the independence of RBI is supposed to have quickened Acharya exit." 

Achara joins the long list of many noted economists/ technocrats, especially his immediate past bosses Raghuram Rajan and Urjit Patel, who quit much before the end of his three-year term.