Rajiv Mehrishi to Arvind Subramanian: Is Modi set to administer the bitter pill of reforms?

The much-talked-about bitter pill of reforms may be headed our way soon. At least, that is what the bureaucratic reshuffle and appointments by prime minister Narendra Modi may be an indication of.

According to reports, 20 bureaucrats were shuffled across central government posts yesterday, the most surprising of which was the transfer of Arvind Mayaram. Mayaram being moved out of the finance secretary’s seat was a foregone conclusion after Modi assumed power because of his proximity to finance minister during the UPA government P Chidambaram, who had appointed him.

However, Mayaram managed to hold on to his post and was reportedly working on the next year’s budget, after helping finance minister Arun Jaitley prepare this year’s budget, when he received his marching orders.

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Of the changes that came into effect, the most prominent ones were the appointment of Arvind Subramanian as nation’s chief economic adviser and Rajiv Mehrishi as the new finance secretary.

All the top-level changes hold almost the same significance given the importance of the executive in Modi’s model of governing. In Gujarat, he famously implemented the much-debated development model with an able team of bureaucrats.

As this article in The Economist says citing author Gurcharan Das, “Mr Modi is a strong-willed moderniser, a man who thinks a capable bureaucracy can fix much of what ails India.”

Thiscomment has to be read along withfree-market economists’ disappointment over Modi’s failure to ring in meaningful reforms.

For example, Mehrishi was chief secretary in Rajasthan, a state that has embraced reforms strongerthan others. He is seen as an advocate of reforms and his Rajasthan experience and expertise is likely of help to Modi.

More importantly, according to a Business Standard report, Mehrishi is critical of many schemes that the United Progressive Alliance rolled out and also of India’s governance system.

“Doing more of the same cannot help. You must do things differently,” he has been quoted as saying in the report.

The appointment of Subramanian carries an altogether different significancegiven hisscathing criticism of some ofModi’s policies.

In an article written in the Business Standard, theUS-based economist had flayed the prime ministerfor his stance on WTO.

“India should withdraw its opposition to the TFA, reformulate its position on agriculture, proceed to persuade its partners of the merits and fairness of its new position over the next few months, and revisit this issue at the WTO in the near future,” he had argued.

In another article, he had criticised the BJP government on the contentious issue of subsidies. “Giveaways and subsidies are not just the preserve of the Congress. Bharatiya Janata Party and the non-BJP governments in the states embrace them, too,” he had said.

Seen in this backdrop, Subramanian’s appointment would also be aimed at silencing the critics who say Modi can’t stand opposing views.

Whatever the reasons behind these appointments and transfers, they definitely seem to send a clear message that Modi means business, in every sense of the word, because he urgently needs to address the criticism that he has not taken the reform path in right earnest and reaffirm that he is indeed a moderniser.

As the article in The Economist points out, with the state elections out of its way and the BJP again clinging to Modi and the development agendahe used during his election campaign, the prime minister may be now better positioned to roll out a reforms that were until now politically unpalatable.

The changes in the executive may well be the harbinger of the bitter pills of reform that Modi had once promised to administer and then seemed to have set aside. Be prepared.