Team Modi loses another star economist

Good luck.
Good luck.
Image: Reuters/Anindito Mukherjee
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Another big gun is leaving Indian prime minister Narendra Modi’s economic team.

On June 20, finance minister Arun Jaitley announced that the country’s chief economic advisor, Arvind Subramanian, has stepped down. Subramanian joined the government in October 2014, just months after it came to power. After his term ended in 2017, he was given a year’s extension. However, the economist has decided to step down abruptly, citing family commitments.

In a Facebook post on June 20, Jaitley thanked Subramanian for his valued service.

Before joining the Modi government, Subramanian was the Dennis Weatherstone senior fellow at the Peterson Institute for International Economics and a senior fellow at the Center for Global Development. Now, he is headed back to the US.

Educated in economics at Delhi’s St Stephen’s College, the Indian Institute of Management Ahmedabad, and Oxford University, Subramanian was named among the world’s top 100 thinkers by Foreign Policy magazine in 2011.

Subramanian is the second marquee name from Modi’s economic team to abandon ship. Last year, Arvind Panagriya, the Columbia University academic hand-picked by Modi in 2015 to lead the newly formed Niti Aayog, had also resigned abruptly.

His exit also comes at a challenging moment for Team Modi. A year before the next general elections, the Indian economy is in a bit of rough patch, with a weak rupee, rising fuel and food prices, and a widening current account deficit.

It hasn’t helped that Jaitley himself has been battling ill-health; unable to attend office since April,he’s been working out of his residence. In the meantime, Modi has appointed railway minister Piyush Goyal to temporarily take charge of the finance ministry.

And there is some consternation in the finance ministry already. “Yes, with the finance minister Arun Jaitley on leave and the CEA quitting, we’ll have to see how it works out,” a senior finance ministry official told Quartz, requesting anonymity.

Some of Subramanian’s key recommendations to the government as the CEA often fell on deaf ears. For instance, the GST rate structure he had suggested was far simpler with a maximum rate of 18%, but it was ignored. The resulting complexity has come to be the biggest point of criticism of the new tax regime.

As the CEA, Subramanian breathed new life into India’s annual economic survey, typically released before the union budget. Not only did he make it accessible to a wider audience, the economist and his team also brought in a number of progressive ideas into what used to be a dense, jargon-laced document.

The last survey in January 2018, for instance, acknowledged the risk of climate change for Indian farmers even as it highlighted India’s gender bias towards male children that had left 21 million “unwanted girls” in the country. These are stark facts that government institutions usually hesitate to present.

“His early diagnosis of the twin balance-sheet had led us to adopt the macro-economic strategy of higher public investment in the Budget of 2015-16. He conceptualised JAM (Jan Dhan, Aadhar (sic), Mobile) as a data base for availing public benefits,” Jaitley said in his Facebook post.

“Of the government’s own making”

Meanwhile, Rajiv Kumar, the vice-chairman of Niti Aayog, the government’s think tank, also came out against the incumbent administration’s habit of blaming the previous Congress-led government for ongoing economic problems.

“Now the economy has come out of those inheritance problems [of the legacy of UPA rule],” Kumar told IANS news agency in an interview on June 19. “No more should they be used as an excuse for anything. Whatever happens now is of the government’s own doing.”