New Delhi: (Reuters) – India’s Chief Economic Adviser Arvind Subramanian said on Wednesday he was quitting his post to return to academic research in the United States, the third high-profile hire to leave Prime Minister Narendra Modi’s economic administration.
Subramanian’s departure comes at a time when the government is grappling with economic woes stemming from a soaring oil import bill, state banks saddled with a mountain of debt and sluggish private investment.
The Indian-born and Oxford-educated economist said he had to move on for personal reasons even though he enjoyed the challenge of playing a role in the stewardship of Asia’s third largest economy.
“This is the best job I have ever had and probably ever will,” Subramanian told reporters.
Modi picked him for the CEA’s post in 2014, which was left vacant by former International Monetary Fund (IMF) chief economist Raghuram Rajan when he took over the reins of India’s central bank.
After the departure of Rajan as governor and Arvind Panagariya, vice-chairman of the government’s main policy think-tank who had come from Columbia University, Subramanian was considered the most-independent voice with global experience, within government.
Subramanian helped Finance Minister Arun Jaitley in the implementation of a new nationwide Goods and Services Tax (GST) last July, which brought India’s 29 states into a single customs union, and supported lower tax rates.
Jaitley said Subramanian’s early diagnosis of the twin balance-sheet problem led the government to adopt a strategy of increasing public spending to support India’s economic growth.
The economy grew 7.7 percent year-on-year in January-March, its quickest pace in nearly two years driven by higher growth in manufacturing, the farm sector and construction. [nL3N1T24RL]
“I will miss his dynamism, energy, intellectual ability and ideas,” Jaitley said.
But the economy has not yet delivered the tens of thousands of jobs that Modi promised to India’s youth and he faces a national election in less than a year. Higher oil prices have pressured the current account deficit and the rupee (INR) has hovered near record lows and is Asia’s worst performer.
At the same time, rising global trade tensions due to the imposition of import tariffs by the United States could moderate global trade growth, tempering Indian exports, analysts say.
Subramanian advocated cutting subsidies.
“Arvind has made a significant contribution in economic policy analysis. It would be a challenge for his successor to fit in his shoes,” said N.R. Bhanumurthy,an economist at National Institute of Public Finance and Policy, a Delhi-based think-tank.
But some members of Modi’s right wing party had targeted him for his frank views on the economy.