India Economy

Do we really need a Chief Economic Advisor?

TCA Sharad Raghavan | Updated on January 11, 2018 Published on July 16, 2017

If the post is filled from outside the govt, that places the CEA at a distinct disadvantage

Chief Economic Advisor Arvind Subramanian’s three-year term ends in October, and the question to be asked is, do we really need to fill the post again once he leaves? Is the office of the CEA one that serves a critical and indispensable purpose?

The fact that he wasn’t consulted for important decisions like demonetisation and that his suggestions on a Universal Basic Income and a ‘bad bank’ have been more or less buried show that the Prime Minister and Finance Minister at least feel that this isn’t the case.

The problem with the post of the CEA is that lately it has been filled from outside the government. This is great if you want people of considerable calibre, since it gives you the option of hiring the likes of Kaushik Basu, Raghuram Rajan, and Arvind Subramanian.

But it also then places the position of the CEA at a distinct disadvantage. Each Ministry can have an Economic Advisor, and most, if not all, are chosen from the Indian Economic Service, and so are selected through the UPSC. The CEA was a UPSC post till 2009. Since then, no such restrictions have applied.

This poses a problem for the CEA. For, as much as Finance Minister Arun Jaitley has said that the CEA is “an outsider who becomes an insider in the ministry”, the bureaucrats often don’t share the same feeling, and it’s the bureaucrats who run the place. The CEA reports to the Economic Affairs Secretary, an IAS officer. And, as Bibek Debroy pointed out in a 2014 article, you can conceivably have a CEA who has to report to somebody who is the same age as him, or maybe even younger.

The whole system of batches and seniority within the civil services ensures that this is a rare occurrence, and the strong belief inculcated within the services is that with seniority comes respect. So what, then, will a young Economic Affairs Secretary feel for an older, but subordinate, CEA? It just makes for awkwardness, and isn’t really conducive for a healthy exchange of ideas and opinions.

Economic Survey

And speaking of ideas and opinions, that brings us to one of the most important functions of the CEA — the writing of the Economic Survey. Over the years, the Survey has emerged as a repository of data, a compendium of analyses, and a launch platform for radical ideas. It’s quite a remarkable document, and it must be said that it has become all the more readable under the current CEA.

It can be argued that such a document can only be created by someone who has the entire year to work on it — that is, a full-time job with one of the major roles being writing the Survey, as is the case now. But that just seems like a waste of resources. A data repository is far easier to create now than ever before, and it can simply be included in the Budget document, or subsumed by the Ministry of Statistics.

As far as a compendium of analyses goes, it’s not as if we are anymore short of people pontificating about the year gone by. Several eminent economists and journalists do that already. It’s a simple matter of the government releasing a book once a year compiling these writings; no need for a full-time job to do it. Since the government will come out with the book, one can rest assured it will pick the articles it agrees with and hence reveal its own opinion as well.

The most interesting aspects of the current CEA’s Surveys have been the ideas and concepts he has introduced for discussion over the years — Universal Basic Income, a ‘bad bank’, the JAM trinity, for example. But these are rendered mere academic issues, with policymakers ignoring the suggestions for the most part. While it makes for fun reading, there isn’t really much achieved that can’t be done without the post of the CEA.

If removing the post of the CEA is inconceivable, then the prominence given to the position should at least be dampened. People forget that it is an advisory role, not one of a policymaker.

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