CEA recruitment row: Flexibility in required qualifications reveals rising redundancy of role; expect a lightweight to fill position

Now that the Ministry of Finance has its original occupant (Arun Jaitley) back, the question on everyone’s lips is who will be his chief economic advisor (CEA), a position lying vacant since 26 July when Arvind Subramanian demitted office.

The government appears in no hurry to fill the post though the 30 June advertisement calling applications for CEA stipulated that the position would be filled by 1 August, if a candidate was selected.

(From left to right) Raghuram Rajan, Arun Jaitley and Arvind Subramanian. Reuters and AFP

(From left to right) Raghuram Rajan, Arun Jaitley and Arvind Subramanian. Reuters and AFP

What we know is that the government has received 15-18 applications. Subhash Chandra Garg, secretary, Department of Economic Affairs, told the media earlier this month that a committee would be set up soon to pick the new CEA from among the applicants, which could take about three to four months.

But even before the appointment has been made, the legacy position has got mired in political controversy. The Congress has questioned the alleged lowering of the professional and educational qualifications. Senior party leader Ahmed Patel tweeted last month his reservation over the eligibility criteria, questioning the government’s motive.

That Patel, who was political secretary to former Congress president Sonia Gandhi, has gone public with his misgivings, shows the ever-growing interest among politicians in matters of business and economy.

Ever since Congress president Rahul Gandhi made the famous ‘Suit Boot Ki Sarkar’ comment, party leaders are getting louder in their criticism of the Modi government's economic policy.

The exit of two top global economists — Raghuram Rajan in September 2016 and now Arvind Subramanian — has offered the proverbial political ammunition to the opposition. Rajan’s 'I do, what I do' demeanour showed him in an enviable position, putting the government on the defensive.

So, is the government trying to resize the CEA slot?

Politics apart, the advertisement seeking applications is insightful. The economist to be picked for the job must have a master’s degree in economics, preferably with a doctorate, and six years of experience in research or giving advice or evaluating economic reforms. The applicant cannot be older than 50 if coming from outside the government and 56 if from within.

Should there be a quarrel over the profile the government seeks for the CEA, a position that has had a string of illustrious occupants?

On top of the list is Manmohan Singh, who held the position from 1972 to 1976. As prime minister, Singh picked noted global imports Kaushik Basu and Raghuram Rajan for the role in 2009 and 2012, respectively. The position remained vacant for a year until another well-known academic in Subramanian took charge under the Modi government.

For the record, Subramanian earned his MBA from IIM, Ahmedabad, and MPhil and DPhil from the University of Oxford. Rajan did his PhD from MIT’s Sloan School of Management. Kaushik Basu, who Rajan replaced, also has a PhD under his belt.

The CEA has traditionally been awarded a mandatory newspaper headline but a dispassionate view of the role and responsibilities offers some useful insights.

- The nomenclature — CEA — itself offers a powerful perspective: the role is advisory and not that of making policy independently.

- Post liberalisation, the intersection of business and politics underwent a metamorphosis. Mainstream politicians, who shied away from business and economy, started digging deep into it. Economic understanding became a must-have qualification.

- In the changed political mindset, economic advisory role, even when administered by best-known minds, got reduced in stature. The advent of all powerful Prime Minister’s Office (PMO) right from Atal Bihari Vajpayee's days ensured there was resident economic talent to advise the prime minister directly. NK Singh, a long-time economic policymaker, made his way to the PMO under Vajpayee.

- Vajpayee’s regime, in fact, offered a unique economic policy template. It made a virtue of inherent contradictions in economic thinking among its Cabinet ministers. There were four economic policy models in play during his regime: the MM Joshi model (Swadeshi push), Pramod Mahajan (pro-business), Jaswant Singh (middle path) and the Arun Shourie model (pro-liberalisation including privatisation). This left very little space for the CEA to make an independent mark. In an interaction early 1999, Vajpayee saw complete merit in having so many differing views.

- Manmohan Singh, a globally acclaimed economic thinker, brought in an additional layer of input in so far as economic policy management was concerned with the Prime Minister’s Economic Advisory Council (PMEAC). He held on to the group right till the end of his term with Dr C Rangarajan as its chairman.

- Cut to today. Modi keeps a close watch on economic policy, taking credit as well as facing criticism. He has stoutly defended his demonetisation and GST moves, while his ministers and babus have only spoken in the affirmative. Of course, he has his own set of economic advisors.

- Like his predecessor, Modi, too, set up the PMEAC and got in a high-profile economist (Arvind Panagariya) to drive NITI Aayog. Modi continues to rely heavily on the government economic think tank though there is a new man (economist Rajiv Kumar) in charge there. For continuity, the prime minister has persisted with Amitabh Kant, a bureaucrat who retains his charm.

- Now Modi has got Swadeshi economics champion (S Gurumurthy) to sit on the advisory board of the Reserve Bank of India (RBI).

Getting back to the CEA, the question that begs answer is whether the role of the economic advisor is that of a forecaster, an evaluator, an endorser or that of critiquing the North Block leadership?

Is there any clarity? No? Who will offer that clarity — the finance minister or the prime minister?

Why should they? The political refrain would be let there be a CEA and some work will surely be assigned. That perhaps explains the flexibility in education profile of the applicant.

Education issue apart, what is obvious is that there is a clear case for setting out transparent Key Responsibility Areas (KRAs) for a role that gets a fairly disproportionate share of headlines, often without any direct power to make or change the economic policy.

Would any government dare do away with the position in view of a multitude of opinions available in the system and the obvious redundancy? Unlikely in the near future. More so, not in an election year.

Get set, therefore, for a lightweight to fill the CEA position to assist in building the mid-year review and subsequently, unveiling the interim budget. Not that things would change dramatically with the new government in 2019! A CEA is therefore, good to have but not a must to have. The difference is perceptible!


Updated Date: Aug 29, 2018 14:42 PM

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