Wrong time to fight? RBI-govt dispute can further damage investor sentiment

If the standoff with the government gets any worse, a test of the central bank's dire warning could come soon

Long-simmering discord between the Indian central bank and the government is turning into a very public brawl. The timing couldn’t be more awful for markets.

In a hard-hitting speech Friday on central-bank independence, Reserve Bank of India Deputy Governor Viral Acharya startled his audience by invoking Argentina of 2010. 

Back then, the Argentinian central bank chief quit after being coerced to hand over a part of its reserves to the government, causing panic in the markets. Knowing that similar pressures exist in India, investors would be right to ask if Acharya’s boss – Governor Urjit Patel – is also contemplating a showdown