RBI's autonomy takes another hit with Viral Acharya's hasty departure

If the government goes ahead and helps itself to a dollop of the central bank's capital, investors will draw their own conclusions.

Viral Acharya's departure as a deputy governor of the India’s central bank is worrisome, though not altogether surprising.

Last October, Acharya delivered a hard-hitting speech on central bank independence. While that ostensibly dealt with Argentina in 2010, the thinly veiled similarity with New Delhi’s plan to raid the Reserve Bank of India’s balance sheet didn’t fool anyone, least of all an embarrassed and angry government.

A standoff over the government’s intentions was temporarily resolved by pushing to a panel of experts the question of whether the RBI had excess capital and could return some of it to the finance ministry.