The wider import of Viral Acharya's speech

The real issue is not the RBI vs MoF; it is about creating and nurturing institutions and ensuring they are led by people with knowledge and wisdom

The sudden, sharp deterioration in the relations between the Reserve Bank of India (RBI) and the Ministry of Finance (MoF) has been the talk of the financial world for the past three weeks ever since RBI Deputy Governor Viral Acharya’s October 26 speech on the independence of the central bank. His talk concluded with an ominous warning: “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...” 

Politicians in power and those close to them think of