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Chief Economic Advisor Arvind Subramanian could be given a two-year extension, if some news reports are to be believed. Such a move would keep him in North Block until at least September 2019.
Such reports have certainly set tongues wagging in the corridors of power. As CEA, Subramanian has been instrumental in coming up with a number of new ideas in his economic surveys, including the concept of a state-backed bad bank, Jandhan-Aadhaar-Mobile, and universal basic income.
However, in spite of being one of the government’s senior-most economists, it is understood that he was not consulted by the powers-that-be on the move to demonetise high-value Rs 500 and Rs 1,000 currency notes.
Subramanian assumed the role of CEA in October 2014, more than a year after his immediate predecessor, Raghuram Rajan, stepped down from the post to take over as Governor of the Reserve Bank of India. Apart from the demonetization bit, Subramanian is said to enjoy the confidence of Prime Minister Narendra Modi and Finance Minister Arun Jaitley.
He is given space to take a stand on issues when they don’t match that of the political or bureaucratic dispensation. For example, in his latest economic survey, he had proposed setting up of a Public-sector Asset Rehabilitation Agency (PARA), a ‘bad bank’ backed and part-owned by the centre to take over more than Rs 6 lakh crore worth of stressed assets from the banking system.
However, as Business Standard reported earlier, Finance Minister Arun Jaitley is said to be against the idea of using taxpayers’ money to deal with corporate defaults.
Even in his 2015-16 economic survey, the CEA had suggested that the pace of fiscal consolidation be perhaps slowed down a little bit in light of Rs 1.02 lakh crore worth of additional layout for the Seventh Pay Commission recommendations in 2016-17. In his 2016-17 budget, Jaitley stuck to the roadmap and announced a fiscal deficit of 3.5 per cent of gross domestic product.
However, Subramanian’s surveys have also been instrumental in identifying the seriousness of the twin-balance sheet problems of the corporate sectors and pushing for central government benefits to the poor through the concept of JAM trinity (Jandhan-Aadhaar-Mobile). He has also time and again asked for a more pro-active privatization policy and pushed Universal Basic Income front and centre in public policy discussions.
The Finance Minister has acknowledged the importance of Subramanian’s forward-looking ideas in the policymaking process. “The Economic Survey always places some futuristic ideas on the table to set a debate going,” Jaitley had said after the budget.
During his stint as CEA so far, Subramanian has headed a panel to suggest a revenue neutral rate and also a panel to suggest ways to incentivize production of pulses.