India’s economy is starting to look like a ship without a captain

Still recovering.
Still recovering.
Image: Reuters/Saumya Khandelwal
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Ahead of the 2019 general elections, prime minister Narendra Modi’s economic team is looking a little thin. Asia’s third-largest economy is currently without a full-time finance minster and a chief statistician, while its chief economic advisor is on his way out.

On Jan. 31, chief statistician TCA Anant demitted the office, and the government has been unable to find a replacement. Last week, citing personal reasons, chief economic adviser (CEA) Arvind Subramanian decided to step down four months before his tenure was to end.

Subramanian’s abrupt exit comes at a time when Modi’s team doesn’t even have a full-time finance minister. In May, Arun Jaitley underwent a kidney transplant and is now recuperating, working out of his residence. In his absence, railway minister Piyush Goyal has been given additional charge of the finance portfolio.

“It is very unlikely that even if doctors give Jaitley a green signal to join work, he would come back to office. His job entails a lot of travelling and he’ll not be able to do so. So, till the elections at least, Goyal will remain the minister,” a senior government official told Quartz, requesting anonymity.

Although no major economic reforms are expected ahead of the polls, the finance ministry has its hands full managing inflation and resuscitating growth. Yet, Goyal is likely to hold the office. “The prime minister’s office doesn’t want this arrangement to be tampered with at the moment,” said another government official, seeking anonymity.

The finance ministry did not reply to an emailed questionnaire from Quartz.

Headless offices

None of this bodes well for a government that touts its economic track record.

“The vacancies in top economic posts as India encounters serious economic headwinds do not inspire confidence. They reprise previously expressed doubts about this government’s ‘bench strength’,” said Milan Vaishnav, director and senior fellow of the South Asia Program at the Carnegie Endowment for International Peace. “And they come at a time when India’s fiscal position is under stress due to rising oil prices, rural distress, and pre-election pressures.”

Meanwhile, the Modi government plans to revise the base years for key economic data and publish a new labour survey, which makes the absence of a chief statistician something of a concern. However, some observers see no need to set off alarm bells just yet.

“The respective data from government departments and the methodology is already in place. The absence of a chief statistician should not be a hindrance in terms of what’s already there,” said Madan Sabnavis, chief economist at CARE Ratings. However, he added that these vacancies may be problematic if new policies have to be implemented.

Even though there may be no short-term impediments, there is a need to fill in these vacancies immediately. “People at the Central Statistics Office (CSO) are doing their work anyway. But it’s necessary that in a democracy, its institutions should be in place. And no institution can be ‘headless’,” an economist at a ratings agency said, requesting anonymity.

With India going to the polls next year, it remains unclear as to when the government intends to fill these high-profile jobs. For one, it will have to present the vote on account—a temporary budgetary exercise—early next year where the role of these officials will be crucial.

“Economic advisors serve two key functions: to provide sound, independent economic advice to the government and to demonstrate credibility to markets,” added Vaishnav. “For both reasons, the Modi government would be well-served to plug existing vacancies as soon as possible.”