Govt begins process of selecting next CEA; Sanyal may take lead in drafting next Economic Survey

Outgoing Chief Economic Advisor, Krishnamurthy Subramanian is expected to work in his current role till early December, with Principal Economic Advisor Sanjeev Sanyal now likely to take the lead in drafting the 2021-22 Economic Survey.

Subramanian, who announced on October 8 that he will not seek an extension, will go back to Indian School of Business, Hyderabad. It is also learnt that for now at least, he has no plans to write a book about his time in the Finance Ministry, unlike his predecessor Arvind Subramanian.

Moneycontrol has learnt that Subramanian informed Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and colleagues in the government around a couple of weeks ago that he would not like to continue beyond his current tenure as CEA, which ends on December 6.

"Its been a delight to work with Subramanian. His academic brilliance, unique perspectives on key economic and well as policy matters and reformist zeal are noteworthy. Wishing him the very best for his coming endeavours," Prime Minister Narendra Modi tweeted after Subramanian made his decision public.

The centre is learnt to have started the process of identifying his successor, ahead of the crucial process of preparing the 2022-23 Union Budget and the 2021-22 Economic Survey. Sanyal is considered a strong front-runner to take over as the next CEA.

When Arvind Subramanian had stepped down in 2018, the centre had formed a committee headed by former Reserve Bank of India Governor Bimal Jalan to search for his successor. A similar panel is expected to be set up this time.

In an exclusive interview with Moneycontrol just ten days ago, Subramanian had said that he was confident of a double-digit growth this fiscal year, and that there could even be an upside to his 2021-22 GDP forecast of 11 percent. He had said that the tax revenue targets for the year could be exceeded

He had also expressed confidence that Air India and Bharat Petroleum's privatisation, and LIC's initial public offering (IPO) will be completed this year. Incidentally, his resignation announcement came on the day the government declared Tata Sons as the winner of the bid to buy Air India.

As CEA, Subramanian drafted three economic surveys - 2018-19, 2019-20 and 2020-21.

It was Subramanian who had batted for a counter-cyclical fiscal policy in the 2020-21 survey and paved the way for record government spending and fiscal expansion as important tools in the fight against the economic slowdown due to COVID-19.

He had recommended a massive increase in healthcare spending in light of the COVID-19 pandemic and regulator for the sector, and criticised credit ratings agencies by saying their assessment of India did not match its fundamentals.

In the survey, Subramanian had slammed ‘asleep at the wheels’ bank boards and auditors for the non-performing asset (NPA) crisis, suggested that the RBI should penalise auditors wherever ever-greening of toxic loans happen, and had recommended another round of bank recapitalisation.