Demonetization-backer Krishnamurthy Subramanian named new CEA

The government Friday appointed a new chief economic adviser in US-trained professor Krishnamurthy Subramanian - a widely known banking expert who had supported November 2016 shock demonetization.

A PhD from University of Chicago's Booth School of Business and currently an associate professor at the Indian School of Business in Hyderabad, Subramanian will replace economist Arvind Subramanian, who resigned from the post in June this year and left the country shortly thereafter.

"The Appointments Committee of the Cabinet (ACC) has approved for the appointment of Dr Krishnamurthy Subramanian, Associate Prof. and ED (CAF), ISB, Hyderabad, to the post of Chief Economic Adviser," said a government notification.

His appointment will be for a period of three years, it said.

Krishnamurthy Subramanian has been a part of expert committees on corporate governance for market regulator SEBI and on governance of banks for the Reserve Bank of India.

He had hailed the BJP-led NDA government's 2016 budget as a budget for rural India, calling it a 'budget for Bharat'. 

In an article he co-authored for the Mint newspaper on November 23, 2016, he had backed the junking of 86 per cent of currency notes. 

The article titled 'Demonetization: Are the poor really suffering?', he argued that "politicians advocating the difficulties faced by the poor are being disingenuous in pushing their claims for political gains." 

After BJP won the Uttar Pradesh assembly elections, he on March 11, 2017, had referred to this article to say: "UP outcome proves my prognosis that reports of poor suffering were either incorrect or politically motivated." 

Last month Arvind Subramanian in a book called demonetization a massive, draconian, monetary shock that accelerated economic slid to 6.8 per cent in the seven quarters after it against the 8 per cent recorded prior to the note ban.

Krishnamurthy Subramanian had however come against the government decision not to give Raghuram Rajan another term as RBI Governor.

Writing an article under the heading 'Attacking our heroes: Raghuram Rajan played a spectacular inning but was phased out nevertheless' for The Times of India on June 23, 2016, he wrote: "In this country, we just don't know how to treat our heroes well. 

Sometimes we deify them. But, often and in particular when it really matters the most, we trash them by questioning their motives. 

Because their exemplary accomplishments cannot be disputed, the vested interests hit below the belt by questioning our heroes' motives." Rajan had supervised his doctorate at the University of Chicago.

"Critics have questioned RGR's (Raghuram Rajan) "Indianness" and his allegiance to the aspirations of India's middle class much like the critics called SRT (Sachin Ramesh Tendulkar) selfish in his pursuit of batting records. Because you cannot question their accomplishments, hit below the belt by questioning their intentions!" he wrote.

"Only those who have worked with RGR know his devotion to his motherland and can appreciate the sacrifices he has made to get an opportunity to contribute to this country." The appointment comes ahead of the BJP-led government presenting its final budget for the term. Finance Minister Arun Jaitley will on February 1 present an interim budget for initial months of 2019-20 fiscal and a full budget will be presented after a new government is elected in May.

The key responsibilities of the CEA include providing policy inputs on industrial development and foreign trade, conducting an analysis of trends in industrial production and releasing statistical information on key economic indicators.
It could not be ascertained immediately when the new CEA would assume office.

According to the ISB website, Subramanian is one of the leading experts in banking, corporate governance and economic policy. Besides, he was a member of Sebi's standing committees on Alternative Investment Policy, Primary Markets, Secondary Markets and Research.

He is also on the boards of Bandhan Bank, the National Institute of Bank Management, and the RBI Academy.

Before beginning his academic career, the website said Subramanian worked as a consultant with JPMorgan Chase in New York.

In previous academic roles, he served on the finance faculty at Goizueta Business School at Emory University in the United States.

He obtained his MBA and PhD in Financial Economics at the University of Chicago Booth School of Business under the advice of Professor Luigi Zingales and Professor Raghuram Rajan (former CEA and RBI governor).

The appointment of an ISB faculty member to a very important office in the Government of India "is very prestigious and something we all should be proud of", ISB dean Rajendra Srivastava said.

Subramanian's association with ISB started with a visiting appointment in 2009 and joined ISB in 2010 as Assistant Professor in the Finance area, he added.

Srivastava said more recently, in 2017, Subramanian was appointed the Executive Director of the Centre for Analytical Finance. The Economic Survey of India is also compiled and released by the CEA. Arvind Subramanian assumed the role in October 2014 and stayed beyond the usual three-year term at the request of union minister Arun Jaitley.

Rajan, who too was a CEA, became the governor of the RBI in 2013.