CEA Arvind Subramanian vs the 28% slab: The behind-the-scenes texts to Jaitley, and the real story of his exit

Former CEA Arvind Subramanian told Lallantop he left in 2018 after four years, not due to a fallout, though he cited GST design differences.

Former Chief Economic Adviser Arvind Subramanian has rejected speculation that he left the finance ministry in 2018 because of a breakdown in relations with the government, saying it was “a natural time” to go after completing four years in office. He acknowledged differences with the government but said those were not the driver of his exit.

“No, that’s not the case,” Subramanian said when asked about talk of serious differences with the Centre, in a discussion on his book A Sixth of Humanity with Lallantop’s Saurabh Dwivedi.

Jaitley’s health and a four-year arc

Subramanian said his decision was shaped by timing and the view that staying longer could reduce his effectiveness in the role.

“I honestly felt that four years were over, and that my effectiveness as CEA by continuing would not be as much as it had been over the previous four years,” he said, adding that Arun Jaitley’s health at the time also mattered. Subramanian referred to the former finance minister’s kidney transplant and said Jaitley’s support might not have been available “to the same extent”.

He also cited personal considerations. “Mostly because I felt that we had done four years… and there were personal issues because of which I wanted to go back,” he said.

GST as a key point of disagreement

Asked to explain what he meant by differences with the government, Subramanian pointed to the early GST structure as an example, saying he had advocated a simpler system with fewer slabs.

He said he had recommended three slabs and opposed the 28% rate. Recalling his exchanges with Jaitley during the rollout, Subramanian said: “I used to speak to Arun Jaitley every day; I would text him 10 times saying, ‘Minister, this 28% slab should never exist.’”

Subramanian said he was disappointed by the complexity at the time but accepted the limits of an adviser’s role: “The role of an adviser is to give advice and to try to persuade people… You are not going to win every battle.”

‘Don’t walk away because you lost a battle’

Subramanian said advisers should not quit simply because their recommendations are not adopted. “One should have thick skin,” he said, adding that advisers should avoid “the vanity” of walking away because their advice was not implemented.

Subramanian served as chief economic adviser from October 2014 to June 2018 during Arun Jaitley’s tenure as finance minister.