THE IDEAS MAN

When Arvind Subramanian was appointed the chief economic advisor in October 2014, he himself perhaps did not anticipate how eventful his tenure would end up being. The biggest impact he has left on the policy and economic landscape are through his Economic Surveys. The surveys before him were ordinarily a data bank of the economy of the year gone by. His Surveys, however, have stood out for starting debates and discussions on a number of issues, including providing targeted government services through the ‘JAM trinity’ of JanDhan-Aadhaar-Mobile, toxic assets in the state-owned banking system, the problem of twin balance sheets, Universal Basic Income for the poor, the concept of ‘stigmatised capitalism’ and in the last survey, a portion on India’s ‘unwanted’ missing women.

When Arvind Subramanian was appointed the chief economic advisor (CEA) in October 2014, he perhaps did not anticipate how eventful his tenure would end up being.

The biggest impact he has left on the policy and economic landscape are through his economic surveys.

The surveys before him were ordinarily a data bank of the economy of the year gone by.

His surveys, however, have stood out for starting debates and discussions on a number of issues, including providing targeted government services through the ‘JAM trinity’ of JanDhan-Aadhaar-Mobile, toxic assets in the state-owned banking system, the problem of twin balance sheets, Universal Basic Income for the poor, the concept of ‘stigmatised capitalism’ and in the last survey, a portion on India’s ‘unwanted’ missing women.

These surveys have been widely read in India and across the world, and also become part of the syllabus in various universities and colleges. Finance minister Arun Jaitley was effusive in his praise on Wednesday: “His four surveys were treated by several independent critics as the best ever.” Jaitley also said Subramanian’s early diagnosis of the twin balance-sheet problem led the government to adopt a strategy of increasing public spending to support India’s economic growth. “I will miss his dynamism, energy, intellectual ability and ideas,” Jaitley added.

These topics, and others, led to furious debates in the media and among policy-watchers and economists. So much so that Jaitley had to clarify a number of times that the job of the CEA was to come up with ideas, irrespective of whether they are implemented or not.

The CEA has also been one of the most vocal critics of the Reserve Bank’s sixmember Monetary Policy Committee, and its inflation modelling. The survey said that in the last 14 quarters before the July-September 2017 period, inflation had been over-estimated by more than a 100 basis points in six quarters, with an average error of 180 basis points.

In fact, tabling of the survey had been considerably delayed as some sections in the topmost rung of the government had objected to Subramanian’s strong criticism. In June that year, Subramanian had reacted quite strongly when MPC held rates.

He had said that non just headline prices, but core inflation had declined as well and indicated that the Reserve Bank’s “inflation forecast errors have been large and systematically one-sided in overstating inflation.”

However, he shared cordial relations with the finance minister and most officials in the ministry.

Subramanian had authored a lengthy dissent note to the panel’s recommendations, in which he suggested that the focus of policymakers should be on reducing primary deficit rather than fiscal deficit.

In spite of being one of the government’s pre-eminent advisors, Subramanian was not consulted by the government on demonetisation, even as it was called an ‘economic decision’ and ‘structural reform’. In fact, he came to know like the rest of us, on November 8, 2016, when Prime Minister Narendra Modi announced it in a televised address.

Also, in 2015, he had headed a panel, which was to recommend to the Goods and Service Tax Council a possible tax structure under GST. He had suggested a standard rate of 17-18 per cent for most items and a revenue neutral rate of 15 per cent, recommendations which were not taken up.

On Wednesday evening, hours after Jaitley announced that Subramanian would be leaving, reporters asked him what are the issues he wished he could have worked more on. Subramanian replied by talking about Universal Basic Income. “If I had the time, I would have done more work on that front. I also wanted to help with the creation of posts of CEA for various states. The state governments are enthusiastic on that idea and I would have liked to work on it,” he said.

“Whether you call me a good CEA or a bad CEA, that is your prerogative, but I am confident none of you will call me a lazy CEA,” he said.