The government on Friday named Krishnamurthy Subramanian, an associate professor and executive director at the Centre For Analytical Finance at the Indian School of Business (ISB) in Hyderabad, as its next chief economic advisor (CEA) ahead of its final budget to be presented early next year.
Subramanian, 47, specializes in banking, corporate governance and economic policy.
The CEA in the finance ministry 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. Raghuram Rajan, under whose advice Subramanian obtained his PhD in financial economics at the University of Chicago’s Booth School of Business, was the CEA before he became the Reserve Bank of India governor in 2013.
The department of personnel said the appointments committee of the cabinet cleared Subramanian’s appointment 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.
“For the office of the CEA, the immediate challenges include managing the fiscal deficit, projected at 3.3% for this year, meeting the ₹ 80,000 crore disinvestment target, recapitalization of banks and tackling the stress in sectors like telecom," said Kathuria. Creating productive jobs in the economy is a medium-term challenge. Phone calls to Subramanian remained unanswered at the time of publishing.
Subramanian’s appointment comes at a time when the National Democratic Alliance government is expected to outline its vision for further reforms and inclusive growth in the interim budget on 1 February. Although the government has resisted pressure to take populist steps in the past, its final budget before national polls 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 who is privy to discussions in the government. Next year’s budget provisions could seek to balance tackling economic challenges with meeting political necessities.
Subramanian’s appointment follows his predecessor Arvind Subramanian demitting office recently to pursue an academic career. Early in his term as the CEA, Arvind Subramanian had listed the major challenges facing the economy as decelerating private investments and the twin balance sheet problem—of lenders saddled with toxic assets and corporate borrowers defaulting on loans.
A prolific commentator on contemporary issues, Krishnamurthy Subramanian, in a 23 November 2016 article published in Mint along with his colleague Prasanna Tantri, argued that politicians highlighting the difficulties faced by the poor due to demonetization were “being disingenuous in pushing their claims for political gains".
His elated colleagues speak of how “Subbu" contributed to the ISB brand. “Professor Subramanian has been a very active contributor to ISB’s intellectual environment since he joined us in 2009. This is a very prestigious appointment which allows a bright, young academic like Subbu to actively help shape the economic policy of the country," said Rajendra Srivastava, dean, ISB.
Subramanian, who has done extensive work on corporate governance, takes up the job at a time the government is taking multiple steps to check what it calls “widespread corporate mal-governance" that came to light with the failure of Infrastructure Leasing & Financial Services Ltd.
Subramanian was in the 21-member Uday Kotak panel that proposed governance reforms for listed companies in October 2017. As part of his corporate policy work, he also served on the boards of Bandhan Bank, the National Institute of Bank Management, and the RBI Academy.
He is a part of several panels of the Securities and Exchange Board of India (Sebi), such as the Alternate Investment Policy Advisory Committee, Primary Market Advisory Committee and the Secondary Market Advisory Committee.
Colleagues at ISB praised his clarity of thought.
“His detailed knowledge about finance and banking has been an asset for the school as well as students," said Kumar Guru, head of external relations at ISB.
Jayshree P. Upadhyay in Mumbai contributed to this story.