Viral V. Acharya, New York University C.V.Starr Professor of Economics, former Deputy Governor of Reserve Bank of India discussed his recent book in this event co-hosted by the Center for Emerging Markets and Pratham Boston.
The session was moderated by Professor Apoo Koticha, Northeastern University.
The book “binds” together Dr. Viral Acharya’s speeches while he was a Deputy Governor at the Reserve Bank of India “(Jan 2017 – July 2019). It features an extensive Preface chapter titled “Fiscal Dominance: A Theory of Everything in India“. The Preface lays down his main diagnosis that the attempt of Indian governments to do too much in the last decade is the root cause of India’s recent slowdown, its challenges on the financial stability front (especially with public sector banks), and a gradual erosion of the operational autonomy of the central bank. In particular, governments have attempted to stimulate the economy by throwing cheap credit at large corporations, small enterprises, and households, without adequate due diligence and preparedness to absorb losses by banks. Such debt-based stimulus keeps going awry and India is perpetually cleaning up the mess left behind in the financial sector. Dr. Acharya proposes ways to course-correct and restore financial stability in India as the government will soon run out of funds if it simply keeps bailing out the losses.