The tale of two great economists

[dropcap]C[/dropcap]hief economic adviser Arvind Subramanian has decided to leave the ‘best job that he has ever had’ and his ‘dream boss’ to go back to the ‘old life’ of researching, writing and teaching. It surely is a great way of leaving one’s job. He has also let us know that Arun Jaitley was a great boss (if not a great finance minister). The ‘compelling reason’ he cited for leaving the job had a bit of hyper-emotionality that was the staple diet of his old native Tamil movies. “It is no secret (sorry, we didn’t know!) that we are expecting our first grandchild in early-September. That’s a very compelling reason…,” he said. Jaitley also spoke about the pressing family commitments, “personal, but extremely important”.

On a serious note, Arvind Subramanian made some remarkable contributions in his job, as testified by Jaitley. “His early diagnosis of the twin balance-sheet had led us to adopt the macro-economic strategy of higher public investment in the Budget of 2015-’16. He conceptualised JAM (Jan Dhan, Aadhar, Mobile) as a database for availing of public benefits. He contributed to the debate of federalism by conceptualising that Indian federalism has not merely to be cooperative, but also competitive. He came out with newer ideas, policy reforms in the sectors of clothing, fertilisers, kerosene, power and pulses. His report on the Revenue Neutral Rate was of great use in forging a consensus which led to the Constitution amendment enabling GST.”

Subramanian is also credited with several futuristic ideas on rationalisation of removal of ‘subsidies for the rich’, universal basic income and climate change. “Socialism without entry and capitalism without exit” was one of his pet themes which he used to pithily explain the Indian economic journey from the ’50s through the ’90s, articulating a long-standing concern on the lack of mechanism to deal with failed businesses. His departure is under much happier circumstances than his equally, if not more illustrious, colleague, Raghuram Rajan, who was denied a second term as RBI governor due to his straight talk, particularly on Modi’s demonetisation plan. In hindsight, the plan turns out to be the biggest policy blunder committed by any government. Rajan, who has been acclaimed for predicting the global financial crisis of 2008, had clearly expressed against the idea and warned that the misadventure was doomed to fail. But the high-handed Modi dispensation brushed all that aside and, in “recognition” of his advice, let him go.

Now, Arun Jaitley has a tough job at hand to get someone like Rajan or Subramanian. “Competence, competence and competence” would be the criteria, he told reporters. He is, of course, in a position to insist on it, unlike the Indian people who have no such privilege in deciding their finance minister.