Changes in key North Block positions signal govts reforms intent

Written by fe Bureau | New Delhi | Updated: Oct 17 2014, 07:16am hrs
In an indication of the Narendra Modi governments plan to quickly embark on the relatively difficult structural changes in the economy it has been fighting shy of, the finance ministry saw two key changes on Thursday at the top level, while a larger reshuffle also saw change at the helm of bureaucracy in the crucial coal ministry. While finance secretary Arvind Mayaram was replaced as the top official at the economic affairs department by his 1978 batchmate of the Indian Administrative Service Rajiv Mehrishi, who currently is the chief secretary of Rajasthan and a former fertiliser secretary, US-based economist of Indian origin Arvind Subramanian was named the chief economic adviser, a post that was lying vacant since Raghuram Rajan vacated it to become Reserve Bank of India governor on October 1 last year.

Anil Swarup, a 1981-batch IAS officer of Uttar Pradesh cadre, will be the new coal secretary. Swarup, who will take over from incumbent SK Srivastava who retires on October 31, will have to preside over the process of reallocation of coal blocks cancelled by the Supreme Court and address the question of the countrys stagnant coal production.

Subramanian, who took charge on Thursday, told reporters that he was hopeful of on the Indian economy and that macroeconomic stability and creating the conditions for investment would be his priorities. Known for his strongly pro-growth stance, the development economist, who is currently senior fellow at the Peterson Institute for International Economics in Washington, had worked closely with Rajan when both were at the International Monetary Fund (IMF).

The announcements came as the stage was cleared for the government after polls for the Maharashtra and Haryana assemblies concluded on Wednesday. The top reform items on the table include deregulation of the price of diesel (the over-recovery on the fuel, the price of which was increased on a monthly basis since January 2013, is over R3.50 per litre right now), fast-tracking the implementation of the goods and services tax (GST) and making some industry-friendly changes in the Land Acquisition Act.

Mayaram, who belongs to the Rajasthan cadre as does Mehrishi, will take over as tourism secretary in place of Parvez Dewan on his retirement at the end of the month. Mayaram was appointed by the previous UPA government and has a full year's service left before he retires on October 31, 2015. Mehrishi retires in August-end and will have just about 10 months as economic affairs secretary. Expenditure secretary Ratan P Watal, a 1978-batch IAS officer from Andhra Pradesh, is now the senior-most among secretaries in the finance ministry and is, therefore, likely to be tipped the finance secretary.

Mehrishi, who will take over from Mayaram in North Block on November 1, spearheaded the overhaul in Rajasthan of archaic labour laws, for which the Vasundhara Raje government has received praise. The labour reforms, for which the President's nod is still awaited, include amendments to the Industrial Disputes Act to raise the threshold workforce limit from 100 to 300 workers for a company to compulsorily seek government approval to slash jobs or close a unit. The rule change assumes importance in the wake of the government's ambitious plan to ramp up manufacturing capacity through initiatives such as industrial corridors and SEZs to accelerate economic growth to over 8-9% in coming years.

Mehrishi is no stranger to New Delhi's power corridors either. He has served stints as secretary in the ministry of overseas affairs under the UPA government. He has held senior bureaucratic roles in the agriculture, law and corporate affairs ministries, the latter two under current finance minister Arun Jaitley during the previous NDA government in 1999-2004.

Mayaram became economic affairs secretary on August 1, 2012, the very day P Chidambaram started his third stint as finance minister. He led the DEA and subsequently as finance secretary anchored the entire bureaucracy in the ministry through two full Budgets and one interim Budget, and through the rupee crash in July-August 2013, in the aftermath of the US Fed tapering.

He also headed the committee that rationalised the definitions of FII and FDI, and suggested further easing of FDI limits in defence, telecom, insurance and media, among others. Between 2005 and 2008, Mayaram was a joint secretary during Chidambaram's second tenure as finance minister. He was in charge of the infrastructure division and was one of the key people behind formulating the public-private partnership (PPP) policy.

Subramanian has written on a number of issues including the emerging giants India and China, global trade and development, multilateral institutions, aid, oil markets, Africa, and the World Trade Organisation. I want to say that I am absolutely honoured to be appointed to this post. This is a time of great dynamism in the Indian economy, and we have a government that has the mandate to bring about change, he told reporters.