Chief economic adviser (CEA) Arvind Subramanian will leave the finance ministry in September after serving for around four years and return to the US due to “pressing family commitments”. Last year, his tenure was extended up to May 2019. Announcing Subramanian’s decision to go back on Tuesday, Union minister Arun Jaitley said in a Facebook post: “His reasons were personal but extremely important for him. He left me with no option but to agree with him.” Separately, the CEA said he will “return to a life of researching, writing, teaching, and reflecting”. Subramanian was appointed as CEA to the finance ministry on October 16, 2014, for a period of three years, before getting the extension. He is on leave from the US-based Peterson Institute for International Economics, where he’s a senior fellow.
He studied economics at St Stephen’s College, Delhi, and holds degrees from the Indian Institute of Management (Ahmedabad) and Oxford University. Describing Jaitley as a “dream boss”, Subramanian said: “This is the best job I have ever had and probably ever will.” There is no word from the government yet if a new CEA would be appointed for the remaining period of its term. The announcement of his departure comes at a time when the rupee has been weakening, oil prices have remained elevated, the current account deficit has widened a tad and bad asset worries of state-run banks continue. However, GDP growth touched a seven-quarter high in the January-March period and the economy seems to have weathered the disruptions caused by the decision to ban certain high-denomination notes and the roll-out of the goods and services tax (GST), with various agencies predicting a pick-up from now on.
Jaitley deeply acknowledged Subramanian’s contributions, saying the CEA’s early diagnosis of the twin-balance-sheet problem (bad loan-encumbered banks and over-leveraged companies) had prompted the government to adopt the strategy of higher public investment in the Budget of 2015-16. Subramanian conceptualised JAM (Jan Dhan, Aadhaar, Mobile) as a database for availing of public benefits. His report on the revenue-neutral rate in the GST regime was of great use in forging a consensus. “He would walk into my room — at times several times a day — addressing me as ‘Minister’ to give either the good news or otherwise. Needless to say his departure will be missed by me,” Jaitley wrote. Subramanian also came up with the idea of a public-sector asset reconstruction agency — a sort of bad bank — to work out massive stressed assets with state-run banks. He was instrumental in crafting a Rs 6,000-crore package for the garment sector, which also included reforms such as the introduction of the fixed-term employment that was later extended to other sectors.
He pitched for the rationalisation of “subsidies for the rich” and a universal basic income, and highlighted the role of the 4Cs (Courts, Comptroller and Auditor General, Central Vigilance Commission and Central Bureau of Investigation) that had historically stymied decision-making. Pushing for rate cuts, he had also locked horns with the central bank, saying its “inflation forecast errors have been large”. The CEA has also been recognised for the literary exploits in the Economic Survey, including well-known dialogues from Hindi movies, and deep and insightful analyses of everything economic and beyond. For instance, the last survey cited the risk for farmers from climate change and gender bias towards male children that had left 21 million “unwanted girls” in the country.