Viral Acharya says increased government borrowing will make corporate loans costlier

• RBI’s deputy governor Viral Acharya has said that increased government borrowing will have an impact on corporate borrowing.
• According to reports, Acharya has said that the country’s borrowing relative to its output has gone up from 67% to 85%.
• Acharya had announced his resignation from the central bank in June.

The Reserve Bank of India’s deputy governor Viral Acharya on his last day of office said that the increase in government borrowing will have a heavy impact on the debt market. According to him, it will make it difficult and expensive for companies to borrow money.

Acharya also said that the country’s borrowing relative to its output has gone up from 67% in 2000 to 85% currently.

Acharya announced his resignation from the central bank in June citing ‘unavoidable personal reasons’, six months before his three-year term ends. He will go back to teaching at New York University.

Viral Acharya is the third high-profile person to have unexpectedly quit the RBI, since the NDA government came to power. Former RBI Governor Urijit Patel too left before his term ended, making him the first governor since 1990s to do so.

Patel’s predecessor Raghuram Rajan’s term too was not extended, and he chose to go back to teaching at Chicago Booth School of Business.