By Elton Gomes
The Central government, on Friday, named Krishnamurthy Subramanian as its next chief economic advisor (CEA) ahead of its final budget early next year. Subramanian will be India’s CEA for a term of three years.
Rajat Kathuria, director and chief executive of the Indian Council for Research on International Economic Relations (ICRIER) said Subramanian was a “thoughtful choice” given his educational background and published works.
Subramanian’s appointment comes at a time when the Narendra Modi government is expected to outline its vision for further reforms and inclusive growth in the interim budget that will be announced on February 1, 2019. The NDA’s final budget before the general elections is expected to include measures that could appeal to different sections of the society.
“The interim budget is always called the interim budget, but the contents could go beyond it if necessary,” said a person familiar with discussions in the government, Live Mint reported. 2019’s budget could maintain a balance in terms of tackling economic challenges and meeting political necessities.
India’s new CEA
In the finance ministry, the CEA is a key contributor to the government’s overall strategy in managing the economy, and offers a critique of the hits and misses through the economic survey.
Subramanian’s first major task as CEA will be contributing to the process of preparing the interim Budget before the Lok Sabha elections in early 2019. Additionally, he will also have to work on the Economic Survey for 2018-19, which will likely be presented before the full Budget for 2019-20 in July next year.
Subramanian is taking on the role at a time when growth has reduced to 7.1 percent (as per July-September data), and debates have been ongoing on liquidity and the credit situation in the financial sector.
The new CEA has a difficult task ahead of him as his appointment comes barely 50 days before the government has to present the Economic Survey. The government will be looking to present its economic outlook ahead of the 2019 polls in the absence of a full budget.
Who is Krishnamurthy Subramanian?
Krishnamurthy Subramanian is currently an associate professor and executive director at the Centre for Analytical Finance, the Indian School of Business (ISB), Hyderabad.
Subramanian has received his doctorate from The University of Chicago Booth School of Business. He is known to be a top-ranking IIT-IIM alumnus, and is also one of the world’s leading experts in banking, corporate governance, and economic policy.
Subramanian’s services on the expert committees on Corporate Governance for the Securities and Exchange Board of India (SEBI) and on Governance of Banks for the Reserve Bank of India (RBI) have established him as one of the chief architects of corporate governance and banking reforms in India.
His research in the fields of banking, law and finance, innovation and economic growth, and corporate governance has been published in leading journals, including The Review of Financial Studies, the Journal of Financial Economics, the Journal of Financial and Quantitative Analysis, and the Journal of Law and Economics.
“Professor Krishnamurthy Subramanian is an exceptionally bright finance faculty member at the Indian School of Business (ISB),” Milind Sohoni, deputy dean, ISB told the Hindu. Sohoni added, “He is a globally recognised scholar in banking, corporate governance and economic policy.”
Subramanian supported Modi’s demonetization
Subramanian is one of the few economists who defended Prime Minsiter Narendra Modi’s demonetisation whole-heartedly.
Days after Modi decided to ban Rs 500 and 1000 notes, Subramanian said that demonetisation would be a revolutionary step in India’s battle against corruption.
“Many of us grew up despising politicians for feathering their own nests, compromising on issues of national importance and dragging their feet on bold decisions. Against this backdrop, the demonetisation effort launched Tuesday night is a refreshing change.
“In a rare instance, the government has taken an action that resonates well with the sentiment among common, law-abiding citizens on the one hand, and with recommendations from several experts on the other,” he wrote in a column in the Times of India.
Defended former RBI governor Raghuram Rajan
In another June 2016 column in the Times of India, Subramanian fiercely defended his teacher and then RBI governor Raghuram Rajan while Rajan faced immense criticism across India.
Subramanian wrote, “After all, India was deemed part of the “fragile five” when he started his innings. During his three-year tenure, not only did he get us out of the fragile five, but he also reduced inflation from 11% to 5% while simultaneously enabling an increase in growth from 5% to 8%. Are we surprised that the vested interests still trash him for choking economic growth!” as per a report in the Economic Times.
Elton Gomes is a staff writer at Qrius
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