The Adviser who called his boss ‘Minister’

Rajeev Jayaswal

Chief Economic Adviser Arvind Subramanian’s departure was not unexpected. In India, populism overshadows economic policies, particularly at the cusp of an election year. Now that the Union Government has entered the crucial phase of its five-year term where voters’ gratification precedes fiscal prudence, capable economists often opt for the comforts of campus teaching over making compromises at the cost of the economy.

Although the exit was imminent, it also turned out to be graceful.  Subramanian sought leave from the cares of the Finance Ministry and his boss Arun Jaitley was happy to make it honourable; an indicator of Jaitley’s appreciation to one of his key aides and the great personal equation they shared. Two other prominent US-educated economists — Raghuram Rajan and Arvind Panagariya — were not that lucky. The three accomplished economists left the Indian government, one by one, in the past three years — Rajan in 2016, Panagariya in 2017 and now Subramanian. They had contributed to the Indian economy and added equity to the institutions they led. India has proven its ability to attract talent, but the challenge is to retain them.

It could be a coincidence that the news about Subramanian’s departure came days before the first anniversary of India’s biggest indirect tax reform. The CEA was not only instrumental in drawing out a politically acceptable Goods and Services Tax (GST) regime, but also played an important role in making it simpler by creating some maneuvering space without disturbing the sensitive federal structure.  

Subramanian’s affable personality helped him convince his political bosses to strike a balance between economic prudence and populism. His personality trait was also evident in the four Economic Surveys drafted under his guidance. He broke several conventions to make the tiresome document more contemporary and relevant. According to Jaitley, “he (Subramanian) elevated the quality of the analysis and the presentation of ideas for public deliberation in his four ‘Economic Surveys’. His documents for four years was treated by several independent critics as one of the best ever produced”. This explains the latest Survey recording an impressive 15 million hits from 117 countries.

Jaitley also recognised Subramanian’s efforts in several key policy issues, including early diagnosis of the twin balance-sheet problem that helped the Finance Ministry adopt the macro-economic strategy of higher public investment in the 2015-16. The Finance Minister gave him credit for his contributions in the conceptualisation of JAM (Jan Dhan, Aadhaar, Mobile) data base for targeted delivery of public services.  

His departure comes at a crucial time for the Indian economy that is still striving to achieve over 8 per cent growth before getting waylaid by the twin disruptions of demonetisation and hasty implementation of GST. Although, the two impulsive decisions were entirely driven by the political executive, Subramanian patiently worked with his team to repair the damage. Subramaniam’s desire to quit must be respected as he is leaving an economy, which now seems to have stabilised after two disruptions. Perhaps, he is not willing to face a third one – of populism — which is anticipated in an election year.