On October 26, 2018, Viral Acharya (Viral), deputy governor of the Reserve Bank of India (RBI), India’s central bank, brought a dispute between the RBI and the Indian government out into the open when he made a fiery speech at the AD Shroff Memorial Lecture. Viral stated, “What matters is the effective independence with which these powers (vested in the Acts governing the RBI or any central bank) can be exercised in practice.” He added, “Governments that do not respect central bank’s independence will sooner or later incur the wrath of financial markets, ignite the economic fire and come to rue the day they undermined an important regulatory institution.” The speech followed tough posturing by the government, warning that it would invoke the dreaded Section 7 of the RBI Act under which it could hold consultation or issue directions to the RBI...

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