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China expert to advise on economy

Subramanian: New role

New Delhi, Aug. 22: US-based economist Arvind Subramanian is slated to be the new chief economic adviser.

Subramanian, who studied at St. Stephens and IIM Ahmedabad, is now a senior fellow at the Peterson Institute for International Economics. His analysis of China as the No. 1 superpower in less than 20 years has won rave reviews; recently he had given Narendra Modi “3As” and a “D” for his first 45 days as Prime Minister.

The appointments committee of cabinet is likely to meet next week to clear Subramanian’s name. Sources said RBI governor Raghuram Rajan weighed in with his recommendation for the economist at a meeting with finance minister Arun Jaitley.

Subramanian, who was on the Foreign Policy magazine’s global list of “Top 100 Thinkers” for 2011, has written an acclaimed book, Eclipse: Living in the Shadows of China’s Economic Dominance. The book said that the world was going to be unipolar, dominated not by the US but by China, whose relative rise would be fuelled partly by American decline and partly by its own economic ascendancy.

Subramanian had compiled an index of dominance — in which China would be at the top by 2030 — based on GDP, trade and the extent to which a country is a net creditor to the rest of the world.

He said that by 2030, the US debt-to-GDP ratio would have crossed 100 per cent, while China which already holds 50 per cent of US paper, would have accumulated far greater credit holdings. In an interview to the magazine Wired, Subramanian said: “I see China’s renminbi replacing the dollar as a global reserve currency in 10 to 15 years.”

Subramanian did his doctorate in economics from Oxford and went on to serve at the forerunner to the World Trade Organisation, before taking senior academic posts at the Harvard and Johns Hopkins universities.

About 45 days after Modi took over, Subramanian published a “Provisional Scorecard for Recent Modi Government Measures”, where he gave three straight As to the Modi regime for tackling inflation, encouraging states to liberalise free movement of fruits and vegetables and partially rolling back restrictive labour laws. He, however, gave a D to the government for raising sugar subsidies and increasing duty on sugar imports in a bid to appease the powerful Uttar Pradesh and Maharashtra sugar lobbies.

The government’s decision today to raise duty on imported sugar to 25 per cent would certainly not have been one with which Subramanian would have concurred, if he had been appointed a week or two earlier.

 
 
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