With 2 key appointments, Modi powers up Finance Ministry

With the Budget-making exercise kicking in, the Narendra Modi Government has made two key changes in the Finance Ministry.

Finance Secretary Arvind Mayaram has been shunted out, while noted economist Arvind Subramanian has come in as the Chief Economic Advisor (CEA).

Mayaram, who had twin charges — Finance and Economic Affairs — has been moved to the Tourism Ministry.

His batch- and cadre-mate Rajiv Mehrishi, the Chief Secretary of Rajasthan, will replace him as Economic Affairs Secretary. His term will run up to next August, when he superannuates.

It remains to be seen who among the five Secretaries (Economic Affairs, Revenue, Expenditure, Financial Services and Disinvestment) will be made the Finance Secretary.

Normally, the senior-most among the five is nominated for the job.

Mayaram is the second key Finance Ministry mandarin to be shunted out after Financial Services Secretary Rajiv Takru was shifted to the Ministry of Development of North Eastern Region in June.

There are many theories doing the rounds on Mayaram’s transfer. One is that he was considered close to the previous UPA regime, and another is that his mother is a key Congress leader in Rajasthan.

A third theory doing the rounds is that his transfer was provoked by his interview with a foreign newspaper, where his remarks were interpreted to mean that there would be no more reforms for the time being, and that the Modi Government would focus on already announced measures.

Chief Economic Advisor Arvind Subramanian, like Mehrishi, a St Stephen’s College alumnus, has been appointed Chief Economic Advisor, a post lying vacant since Raghuram Rajan was elevated as Governor of the Reserve Bank last August.

“The Appointments Committee of the Cabinet has approved the appointment of Dr Arvind Subramanian as Chief Economic Advisor for a period of three years,” a statement issued by the Finance Ministry said.

Addressing the media after taking charge, Subramanian said: “For any economy like India, the two big things are macroeconomic stability and, of course, creating conditions for rapid investment and growth.” He added that while creating opportunities for all segments of society, no one should be left out.

Subramanian is believed to be close to RBI Governor Rajan, a factor that some believe tipped the scales in his favour.

Among other things, the Chief Economic Advisor is responsible for producing the annual Economic Survey as well as a mid-year economic review presented to Parliament.

Third such appointment He is the third economist of international renown to have been appointed to the key policy post in recent years. Kaushik Basu (World Bank Chief Economist) and Raghuram Rajan (current RBI Governor and former IMF chief economist) were the other two who recently served as CEA.

With these new appointments, the team for Budget 2015-16 is in place.

The Finance Ministry has already initiated the process and detailed consultations will now take place with various stakeholders, after which the Budget will be presented in February.

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