U.S.-based economist Subramanian unlikely to be India adviser - source

By Manoj Kumar

NEW DELHI (Reuters) - U.S.-based economist Arvind Subramanian is unlikely to become chief economic adviser after the prime minister questioned a request to appoint him, a source said on Tuesday, a further delay to filling a position key to writing the budget.

A senior official at the Finance Ministry said Finance Minister Arun Jaitley would send a list of new names to Prime Minister Narendra Modi and a final decision would be taken by the two men. The official declined to be identified.

Subramanian, a senior fellow at the Peterson Institute for International Economics, was informally recommended to the post by Jaitley more than a month ago but Modi still wants to discuss the appointment, another source had earlier told Reuters.

It was not clear whether Subramanian's name would be on the new shortlist or why the prime minister had not accepted the initial recommendation. Some in Modi's Hindu nationalist party have criticized a trend of choosing Western-trained big name economists for senior advisory positions.

Traditionally, the chief adviser is responsible for producing the annual Economic Survey, a document on the state of the economy that underpins the drafting of the budget, and a mid-year economic update that is presented to parliament.

Jaitley is due to present his first full-year budget in February.

The finance minister is recovering from infection following gastric bypass surgery to treat a long-standing diabetic condition. He was discharged from hospital on Monday and could take another week before attending the office, one ministry official said.

Two sources said he would not attend the World Bank's annual meeting from Oct. 10-12 in Washington as previously planned, and would be working from home for some days.

The post of chief economic adviser is a high-profile position but has been vacant for the last year. It was last occupied by Raghuram Rajan, a former International Monetary Fund chief economist. Rajan was later appointed as the governor of the central bank, a post he still holds.

Development economist Subramanian worked closely with Rajan when both were at the International Monetary Fund.

"We are waiting for the finance minister, who will take prime minister's approval for the new chief economic adviser," the source said, adding the new government could consider a "wider pool of talent" across the country for such posts.

(Reporting by Manoj Kumar; Writing by Frank Jack Daniel; Editing by Douglas Busvine and Janet Lawrence)