Swamy vs Arvind Subramanian: There is more to it than meets the eye

‘Licence Raj’ or ‘Permit raj’ and later ‘Inspector Raj’ are terms we are all familiar with. Soon, a new one, ‘Swamy Raj’, could emerge to be a part of urban folklore. This refers to the tirades unleashed by BJP parliamentarian and party warhead Subramanian Swamy to execute his vicious attacks against technocrats holding important offices in the government with, like Swamy himself, international educational/professional standing. [caption id=“attachment_2848826” align=“alignleft” width=“380”] Subramanian Swamy (left) and Arvind Subramanian. PTI[/caption] One could distinguish a fresh episode of Swamy Raj with the following characteristics. One, it often begins with unsubstantiated allegations in the public domain (often social media) that gradually works its way to break his target psychologically. This is done by questioning their patriotism and personal integrity. All this as the government observes radio silence till the issue turns red-hot to the extent that the target would concede defeat even before the fight begins. The Swamy Raj has already been successfully executed in the case of ‘OperationR3’—the operation by Swamy to ensure Reserve Bank of India (RBI) governor Raghuram Rajan didn’t get a second term and duly sent back from India. Swamy leveled a barrage of allegations against Rajan ranging from Rajan not being “mentally Indian” to his “professional efficiency” and “wrecking the economy” with his interest rate policies, logically with the silent approval of Modi-government and the RSS. Rajan got the message and threw in the towel well before the real fight began. Swamy Raj — part 2 So, the latest instance of ‘Swamy Raj’ is this. Swamy wants Chief Economic Advisor (CEA), Arvind Subramanian, sacked. In a tweet on Wednesday, Swamy said Subramanian encouraged US Congress to act against India to defend the interests of US Pharmaceutical companies.

Who said to US Cong on 13/3/13 the US should act against India to defend US Pharmaceuticals interests? Arvind Subramanian MoF !! Sack him!!!

— Subramanian Swamy (@Swamy39) June 22, 2016

In a second tweet, Swamy also said it is Subramanian who encouraged “Congi” to become rigid on GST (Goods and Services Tax) clauses, apparently referring to CEA panel recommendations on GST .

Guess who encouraged Congi to become rigid on GST clauses ? Jaitely's economic adviser Arvind Subramanian of Washington DC

— Subramanian Swamy (@Swamy39) June 22, 2016

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To be sure, we do not have information to comment on the first charge — Subramanian encouraging US Congress against Indian pharma companies — the second one is outright nonsense. It was a panel under Subramanian who offered in December 2015, a practical solution to iron out the political differences between the BJP and Congress on the GST issue through his report. The CEA panel recommendations perfectly aligned with two of the critical demands of the Congress party — 18 percent standard GST rate and scrapping of 1 percent inter-state trade tax. The panel also suggested a three-rate structure. A concessional rate of 12 percent for public goods that concerns the deprived or weaker sections, a standard rate of 17-18 percent that would concern majority of items and a rate of 40 percent for luxury items and tobacco, aerated drinks and pan masala etc. These recommendations rather helped to arrive at a consensus rather conflict. As for the issue of including the GST rate in the Bill, the main contentious demand of the Congress party, Subramanian has always taken a position that it should not be the case. The CEA has maintained that the inclusion of rate in the Bill will not be prudent in larger economic interest, which, interestingly, is the stance of Modi government too. Subramanian has clearly supported BJP’s stance citing the global experience. Such a move is not wise and the minute details of tax policy should not be put in any Constitution for a number of reasons, the CEA has said. “First, these are details and choices that have to be made via political process. Second, if you cast these things in stone, they become irrevocable. When at some future point suddenly circumstances change radically, it can lead to huge problems. That is why it is wiser to leave it to the political process,” Subramanian had said. In this backdrop, what prompted Swamy to assume that the CEA is prodding the Congress to become “rigid” on GST clauses, whereas Subramanian has actually batted for BJP’s interest on the crucial point. Only Swamy knows the answer. At the outset, it certainly looks like another onslaught of “Swamy Raj”. But, what one should not miss here is the interesting fact that this time, Swamy has dragged Finance Minister Arun Jaitley too into the boxing ring by accusing his advisor of aiding the Congress, a clear suggestion that an environment of infighting indeed exists within the BJP camp targeting the finance ministry. As they say in Hindi, “Raghuram Rajan to bahana hai, Arun Jaitley nishaana hai (Subramanian is the ruse, Jaitley is the target).” Swamy’s attack on CEA Subramanian is even more significant now since Subramanian is among the top contenders for the RBI Governor post to succeed Rajan post September this year. Subramanian is most likely to succeed Raghuram Rajan as central bank governor among the five candidates the government is said to be considering, a Bloomberg News survey showed. As seen in the Rajan episode, the fact that the BJP government and Prime Minister Narendra Modi in particular have offered silent support to Swamy Raj shows there is more than meets the eye.