Four months before he was named as the finance ministry’s new chief economic adviser, Arvind Subramanian, in may 2014, prescribed books by George Orwell, Gabriel Garcia Marquez, Pankaj Mishra and VS Naipaul as part of a reading list for those wanting to understand economic development.
But as a macro-economist who has written papers on wide range of issues that cover trade, climate, tax, corruption and intellectual property rights, Subramanian has published some in-depth research on India, where he has pointed out that benefits of demographic dividend may be unclear in the country.
In fact, even as the NDA touted the benefits of the Gujarat model of development, Subramanian and Asian Development Bank economist Utsav Kumar, argued in a paper they co-authored in late 2011 that Kerala had posted among the highest rates of growth in the 1990s (4 per cent per capita), and continued its growth in the 2000s, showing great resilience during the crisis, and experiencing “virtually no decline” in growth.
“India, evidently, is capacious enough to allow both Bania, reforming Gujarat and Marxist, and reform-resistant Kerala to flourish,” they wrote in a working paper titled ‘India’s Growth in the 2000s: Four Facts’.
The economists, in the 2011 paper, also traced the effect of the country’s huge population on its economic growth. While noting that the so-called demographic dividend was only really strong during the 1990s but was not so in the 2000s.
In his first press interaction on Thursday, Subramanian buttressed this point and underscored the importance of macroeconomic stability, along with creating conditions for rapid investment and opportunities for all segments of the society, as the two key priorities for the Indian economy.
The state of the Indian economy has been a key concern for him and he highlighted the issue as recently as February 2014 in his oral testimony on India before the US International Trade Commission.
“India’s economy is a source of concern because of a deteriorating investment climate for all business (domestic and foreign), declining growth and a slowly stabilising macro-economy,” he had highlighted, while urging the commission to await the formation of a new government in India.
While noting that most concerns by US businesses over India are sectoral, he had also urged the panel to address these quickly and if required through the WTO dispute resolution committee.
Interestingly, Subramanian has also co-authored papers with his predecessor in the finance ministry and now Reserve Bank of India Governor Raghuram Rajan.
In a paper co-written by them in 2008, which is incidentally a part of Subramanian’s reading list, the two economists have argued that humanitarian aid does not help economies grow. This is a view shared by Prime Minister Narendra Modi.
Along with Cornell University professor Eswar Prasad, Subramanian also wrote a paper on foreign capital and economic growth. The paper notes that this is a major issue for developing countries as they “try to decide whether to open themselves up more to financial globalisation, and if so, in what form and to what degree.”
As a senior fellow at the Centre for Global Development, Subramanian also directed the Understanding India Initiative — a platform to discuss India’s economic policies and how it should shape global views on development.
Besides these papers, Subramanian has authored five books – of which one is on India.