A maverick economist who speaks his mind

It was in October 2014 that US-based economist Arvind Subramanian took office as the Chief Economic Advisor in the Finance Ministry for a three-year term.

The appointment was keenly awaited as not only was the Modi government facing challenges of high inflation and modest economic growth, but Subramanian was also taking over from Raghuram Rajan, who had left in 2013 to take charge as RBI Governor.

Interestingly, before he came as the CEA, Subramanian, who was a Fellow at the Peterson Institute for International Economics and also at Center for Global Development – both based in Washington, in an article on the Peterson Institute’s website, had said that the Modi government’s first Budget was “disappointing but retrievable”.

So, the question is whether Subramanian has changed his outlook since he took office as the CEA?

Not really. ‘Hands on, independent minded and a creative thinker’ is how those who have been associated with him describe Subramanian.

Subramanian believes in taking lot of feedback before reaching a conclusion, said an official. He, in fact, has the reputation of speaking his mind to the powers that be.

The CEA’s post had started seeing a change from Rajan’s time and Subramanian made it even more personality driven. Earlier, CEAs were more conservative and circumspect. Subramanian, in fact, has been vocal about his views more often than not, to the discomfort of the government.

An example of this was his take on the impact of note ban. He was the first from the government to say it may result in reduction of 0.25-0.5 percentage points in real GDP growth in 2016-17. This range is relative to the baseline estimate of real GDP growth of 7 per cent for 2016-17, he had said.

Keen to put forward his views, he gave a dissent note in the report of the NK Singh-led committee to review the Fiscal Responsibility and Budget Management Act. Subramanian, who was a member of the committee, had said that the proposed fiscal deficit targets were arbitrary. He was also a proponent of the JAM or Jan Dhan-Aadhaar-Mobile trinity for directly transferring benefits to the poor to plug leakages.

He had first proposed this in the Economic Survey 2015-16 to help implement large-scale, technology-enabled and real-time Direct Benefit Transfers, which has since then been taken forward by the government.

To boost economic growth, he was the first to suggest increasing public investment and defer the fiscal consolidation, a plan accepted by the Finance Ministry.

Often seen as a “maverick economist”, Subramanian has also thrown up new ideas for discussion such as Universal Basic Income, even though they may not always have found acceptance in the government. “He is an economist and his proposals give the government an agenda to work on in the future, even if implementing it immediately is not possible,” said an official. Most recently, he was seen as taking on on the Monetary Policy Committee for not lowering rates, despite cooling inflation.

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