When it’s between two Subramanians

[dropcap]O[/dropcap]ne Subramanian goes out and another Subramanian enters; one is a bitter critic of demonetisation while the other is a fan. This pretty much catches the drama in the North Block office of the government’s Chief Economic Advisor. Both are highly accomplished academicians and have connections with former RBI governor Raghuram Rajan. While Arvind Subramanian has been a great fan of the former governor, Krishnamurthy Subramanian has done research under the guidance of Rajan. A PhD from Chicago University-Booth School of Business and a top-ranking IIT-IIM alumnus, Krishnamurthy Subramanian has been serving as Associate Professor of Finance and Executive Director for the Centre for Analytical Finance at the Hyderabad-based Indian School of Business. But there are more dissimilarities than similarities between the two Subramanians.

The mild-mannered outgoing economic advisor turned a bitter critic of demonetisation and the half-baked implementation of GST. Just as he walked out of his finance ministry assignment, he spoke about the huge collateral damage brought about by demonetisation to the economy and the lives of people. IFormer governor Raghuram Rajan’s differences with the Modi government on demonetisation are well-known and were in fact used by Modi to deny him a well-deserved second tenure, although the outstanding Indian economist of international standing was the one who identified the ‘twin balance sheet’ problem of the huge non-performing assets of Indian public sector banks.

But Arvind, the former IMF economist, was critical of the manner in which the government handled the NPA problem and shared the concerns expressed by Raghuram Rajan that decisions approving big-ticket loans by the public sector banks were influenced by factors that were less than straightforward. Banks were caught financing unviable infrastructure projects and schemes on the basis of fancy project reports.

The incoming Subramanian’s endorsement of demonetisation need not carry much weight except as admiration of Prime Minister Modi. His support for Modi’s policies lacks the kind of conviction that can be read into the approaches of his more illustrious colleagues, including Rajan and Arvind. Krishnamurthy has a formidable task at hand in preparing the last Economic Survey of the Modi government ahead of its crucial 2019 elections, which appear to be increasingly difficult as the government enters its last leg with humiliating electoral setbacks on the cards in what has been fancifully billed as the semi-final of the next General Elections. With a regular budget off, it will be the Economic Survey that has to set the tone for the Modi government to catch people’s fancy in the absence of any strong narrative similar to the one it went to people in 2014.