Swadeshi PM Fills Gap By Banking on Videshi Men to Deliver Economic Idea of India
Humour has a habit of hiding truth by default. A remark made in jest
by an economist friend resonated with reality. Can India’s Prime
Minister or finance minister do without an Arvind in North Block?
Lutyen’s Delhi is yet to reconcile to the disruptive political idea of
Arvind Kejriwal. The eponymous syndrome has now affected even PM
Narendra Modi, so much so that he simply could not ignore the talents of
an economist with World Bank connections for running the Indian
economy. North Block has been, of late, grappling to find an Arvind with
the appropriate degree and connectivity to act as an accelerator or at
least a stabiliser of India’s growth trajectory. Both economic and
political observers are keenly monitoring the movements and appointments
of key advisors and officials at the Centre. They expect a bureaucratic
establishment with a significantly new look in line with the new
dispensation’s thinking. Last week, Modi decided to import from
Washington DC, Arvind Subramanian as India’s 12th Chief Economic Advisor
(CEA). The chair has been lying vacant ever since the UPA government
appointed Raghuram Rajan as the RBI governor.
But all Arvinds do not lead such a charmed life. On the same
day, Modi shunted out Finance Secretary Arvind Mayaram from North Block
to the little known Patel Bhawan as Tourism Secretary. It is for the
first time that a Finance Secretary has been transferred to such a
relatively insignificant ministry. At the same time, the PM overlooked
the claims of Arvind Panagariya, a fellow Gujarati and a
foreign-educated economist who is the toast of the saffron chatterati
class. Panagariya was the frontrunner for the CEA’s post and was backed
by credible economists like Jagdish Bhagwati. But the PM chose a South
Indian Arvind instead, whose spoken language is listed as Hindi over
others. Earlier, Arvind Virmani had served as CEA from 2007-09.
On
a serious note, Subramanian’s appointment raises an issue about the
essential qualifications for the appointment of a key government
advisor. Modi is the first homegrown leader to wear his Swadeshi
credentials on his sleeve. He speaks in an Indian language and promotes
Indian ideas and icons. But the compulsion of global connectivity has
forced the Swadeshi politician to depend on a World Bank/IMF-pedigree
economist to carry forward his growth model. So far the PM has shown a
different style and approach in running the government. When it came to
putting together a team for economic reforms, however, he has followed
the formula set by predecessors, from Rajiv Gandhi to Manmohan Singh, of
looking for external experts.
Subramanian is one of the most
respectable global economists. It is not a coincidence that Modi decided
to limit his choice to a group which has been connected with the
Brentwood institutions like the World Bank and International Monetary
Fund (IMF). In fact, barring Bimal Jalan, the former RBI governor, and
Deepak Nayyar, the former V-C of Jawaharlal Nehru University, all the
CEAs who came later were actively associated with the World Bank or IMF.
Even Montek Singh Ahluwalia, who served as CEA to Manmohan Singh (a
former CEA himself) when he was P V Naransimha Rao’s finance minister,
was a nominee of Washington-based banks. Later on, economists like
Shankar Acharya, Ashok Lahiri, Kaushik Basu and Raghuram Rajan, too,
were associated with the Fund banks before being appointed as CEA. The
process of borrowing people from overseas started in the early 1990s,
when the finance ministers of Pakistan, India and Bangladesh were chosen
from among economists who had worked for the IMF, World Bank or other
international financial institutions. As one of the desi Leftist
economists put it, “It appears that we have an unwritten agreement with
the World Bank and IMF that India would keep one of their
representatives in North Block to keep a watch on things. Afterwards,
they all return to Washington after retirement.”
Subramanian is
not an exception. An author of numerous books, the 54-year-old is
currently working as a Dennis Weatherstone Senior Fellow at the Peterson
Institute for International Economics. Earlier he was associated with
the IMF as an assistant director in the research department. He is known
more as a trade economist than one with the expertise needed to manage
the macroeconomic issues confronting India. He has written extensively
on WTO matters and India’s policy on World Trade. He has been critical
of India’s stand in the WTO on food subsidy. He had also chastised NDA’s
first interim budget. Modi has shown magnanimity in appointing him in
order to get a contrarian view on his own economic philosophy. But some
economists have raised questions about Subramanian’s suitability for
India, which needs to put its internal monetary and fiscal policies in
place. If Modi’s eyes are set on increasing the nation’s share in
international trade, then Subramanian is perhaps the best bet. But the
question is, why were macroeconomists like Subir Gokarn, the former RBI
deputy governor, and Urjit Patel, the current deputy governor, ignored?
Though both have foreign degrees and IMF and World Bank connections,
they were found not wired enough abroad. According to government
insiders, Subramanian was picked because Modi is looking to play an
important role in dictating the direction of the global economic agenda,
like Manmohan did during his first tenure as Prime Minister.
The
appointment of Subramanian and Rajiv Mehrishi as the new Finance
Secretary, along with a new Coal Secretary indicate that Modi is not
only shaking up the Civil Services, but is also giving it a new shape.
During the past four weeks, he has ordered the reshuffle of over 40
joint secretaries and about a dozen secretaries. He has even overturned
Manmohan’s directive, which made it mandatory for the Cabinet Secretary
to consult the minister concerned before appointing any secretary or
joint secretary in his ministry. Now the PM alone chooses the
secretaries. He even holds regular review meetings with them. He wants
them all to communicate with him directly. Since Modi has made
development his mission, he is discovering the tools and personnel who
can deliver his idea of ‘Swachh and Swasth Bharat’ (A Clean and Healthy
India). Perhaps he is not able to get indigenous people qualified enough
to serve as his companions in Vikas Yatra. Modi appears to be filling
the talent deficit gap by importing skills for now. So far he has been a
campaigner, not a crusader. In the next few weeks, India may see a
fully constructed Modi Sarkar in place, with or without the help of
videshi men and material.
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