Arvind Subramanian Well Positioned to Guide India as It Moves into World Leadership Positions
Op-ed in the Economic Times, India
© Economic Times
A top economic policymaker in any government must meet three tests. She or he must be able to conceptualize the problems that the country faces. She or he must be able to devise solutions to them that are both effective and practical. And she or he must be able to articulate those strategies clearly, inside the government and publicly, and persuade the many relevant players to support them.
On all these counts, Prime Minister Narendra Modi has made an inspired choice by picking Arvind Subramanian to become chief economic adviser (CEA) to the government of India.
Prime Minister Narendra Modi has made an inspired choice by picking Arvind Subramanian to become chief economic adviser (CEA) to the government of India.
As a close colleague and friend of Subramanian for the past seven years at the Peterson Institute for International Economics, I can personally attest to his superior talents in all of the arenas that will be critical to his own success and, much more importantly, to that of his country and of the Modi administration.
Subramanian is a superb conceptualizer and creator of innovative policy proposals. In fact, he will have many more ideas than his (or any) government can pursue even over the course of an extended period in office.
The breadth of his expertise, as demonstrated by the dazzling array of his publications over his stay at the Peterson Institute, is exceptional: macroeconomics, development, finance, trade, the environment, and many others.
For example, he has proposed creative responses to such key issues facing the new government as its treatment of intellectual property rights and its defense of food security for the Indian population in the context of the World Trade Organization (WTO) debate, fully defending Indian interests but with tactical shifts from the previous government that would be much more likely to succeed.
Some observers have in fact suggested that Subramanian has too many interests to focus on those of greatest importance to India at this point in time.
But the president of the Center for Global Development in Washington, Nancy Birdsall, where he has also been a senior fellow, has rightly observed that he "is a development economist at heart."
He has been leading the "Understanding India" initiative at the Center, and his greatest intellectual ambition is to write the definitive study on development.
There is no reason to doubt that he will be a source of thoughtful proposals to address the priority concerns of India, whose greatness and huge potential is deeply rooted within him, both today and for the foreseeable future.
Moreover, India will soon be the world's most populous country and third largest economy, and it can only benefit by drawing on such a top global economist.
Subramanian also has exceptional talent in conveying his ideas clearly and forcefully. His written work ranges from lengthy books to refereed articles in scholarly journals to short policy briefs to op-eds in most of the world's leading newspapers, especially in India. He has been a widely sought-after speaker around the globe.
His sophistication on the politics of economic issues—both domestic and international—will help him greatly in selling his own ideas and those of his government. I hope that his new environment will deploy him as extensively as possible to help bring its message to the widest possible audience. There are important personal characteristics that will reinforce Subramanian's substantive knowledge and skills.
Perhaps the most salient is intellectual integrity, a commitment to advance one's ideas firmly and forcefully in seeking to persuade the country's leadership to adopt new courses of action that may at first glance seem too difficult conceptually or, especially, politically.
This will be reinforced by his enormous energy and tenacity, as demonstrated repeatedly by his persistence in championing ideas that may be too new or controversial to win immediate support.
The new CEA can be counted on to "stick to his guns" in pursuit of important and especially fresh ideas even in the face of entrenched and powerful resistance. The prime minister and the minister of finance, and the people of India, will be well served by an adviser with this rare combination of integrity and energy.
Attuned to India
The unquestioned integrity of Subramanian has been on display with his willingness, along with his strong support for the Modi government from its outset, to publicly question a couple of its early policies.
In these cases, notably the initial budget and the WTO debate, he has, in fact, proposed constructive alternatives that would fully promote the interests of both India as a whole and the new government.
I understand from afar that concern was expressed that Subramanian had spent a long time outside India and thus is not sufficiently familiar with the country's problems and political realities.
There was never any merit in this critique because he travelled home many times every year and remained in close touch with Indian economic and policy developments, as clearly indicated by his omnipresent articles and comments in the local media.
We at the Peterson Institute, and many other groups in Washington, relied on him to keep us fully informed on all things Indian, and he was even asked to brief President Obama before the president's trip to India.
The more important response to this criticism, however, is that Subramanian's years outside India, like those of Raghuram Rajan as previous CEA and now as governor of the Reserve Bank, can bring major benefits to his country.
As India participates increasingly in the global economy, his experience at the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO, is an invaluable source of both ideas and practical understanding that can prove exceedingly valuable to India.
His pathbreaking research on a variety of global economic topics and parts of the world, especially on the development paths and policies of many countries, creates a rich bank of intellectual capital that can now be deployed to the benefit of his country.
Three examples illustrate these possibilities. Subramanian's most famous book, Eclipse—with more than 100,000 copies in print worldwide and innumerable citations all over the world—is on the increasingly central role of China in the global economy and how that will affect the functioning of the entire international system in the decades ahead.
Prime Minister Narendra Modi has rightly looked to China as a model for some aspects of Indian development, and few advisers could know where that example is appropriate, and pursue that objective, better than the new CEA.
Global Help in Reforms
Another issue is the use of international economic cooperation to promote domestic reforms of the type that will hopefully become the hallmark of the Modi government. China's leadership deliberately and decisively used its entry to the WTO 15 years ago to help implement major changes in a host of policies that had previously resisted modernization.
Japan is now pursuing a similar approach through the Trans-Pacific Partnership, as Modi has undoubtedly discussed with Prime Minister Abe.
India is, in fact, one of the few major countries that has not availed itself of such a strategy, and the rich experience of the new CEA enables him to bring such a concept into consideration.
More broadly, Subramanian has focused on the international role of rising economic powers, notably India as well as China and several others. He has stressed the need for these countries to play constructive as well as increasing roles in global governance, and is thus especially well positioned to help guide India as it moves inevitably into world leadership positions.
Subramanian is not always the most modest person. When I hired him away from the IMF in 2007, he predicted that he would publish at least one op-ed per week for the indefinite future. He not only delivered on that rather ambitious promise but actually exceeded it on numerous occasions. There is a famous aphorism in the United States that is attributed to the great baseball pitcher Dizzy Dean from the 1930s: "It ain't bragging if you can do it."
Subramanian certainly fulfilled his own high expectations here, and I am confident that he will do so for India. The United States also has a CEA to advise its head of government, a Council of Economic Advisers comprised of three leading economists that has included many Nobel laureates and other famous practitioners of that profession over the years.
India's CEA is a single person assigned the daunting task of advising its head of government, and other leaders of economic policy, on his own. Prime Minister Modi and his colleagues will benefit enormously from the engagement of Arvind Subramanian in their government, and their country will be a much better place for their doing so.
It is also enormously encouraging that the new government, in filling such a key position, has turned to an economist with such strong convictions and commitment to reform, and with extensive engagement in the world, as well as great accomplishments and brilliance. The appointment is inspiring, as well as inspired, for what it portends for the Modi administration.