Even as the BJP approached the Election Commission to stop the UPA government from appointing a new Navy Chief and Lokpal mid-way into elections, the Centre has appointed columnist and RBI Chair Professor at the National Institute of Public Finance and Policy, Ila Patnaik, as Principal Economic Advisor, a post that had been vacant since November 2013.
The appointment assumes significance as Dr. Patnaik has in her columns by-and-large concurred with Reserve Bank Governor Raghuram Rajan’s policy stances. “The most important factor that favours success this time is Governor Raghuram Rajan,” Dr. Patnaik wrote days after Dr. Rajan’s appointment in a column on an RBI proposal about interest rate futures. More recently, in April she wrote: “His strategy of an aggressive attack on inflation, despite the scepticism often voiced in the Indian monetary policy debate about the effectiveness of monetary policy, was the right strategy and is yielding results.”
This is in sharp contrast to the BJP’s stated position on Governor Rajan. BJP treasurer Piyush Goyal recently said in an interview to a business newspaper: “I think Governor Rajan is only aggravating problems and is making it worse by increasing interest rates….”Delhi’s bureaucratic and political circles are rife with speculation that if the BJP is voted to office in the Lok Sabha elections it could even “sack” Governor Rajan. Days before bagging the Reserve Bank’s governorship Dr. Rajan had as the head of a UPA Government-appointed committee on evolving a composite development index of states ranked Gujarat 12th out of 28 and categorised it as “less developed”. The report challenges BJP’s prime ministerial candidate Narendra Modi’s projection of Gujarat as a model state.
“Heavens would not have fallen if a post that had been vacant for six months could have been left for the new finance minister to take a decision on,” said a top Finance Ministry source not wanting to be quoted adding that Union Finance Minister P. Chidambaram had presented the Interim Budget in February without a Chief Economic Advisor or a Principal Economic Advisor.
Ms. Patnaik did her Ph.D. in Economics from the University of Surrey, Guildford, U.K. The post of the Principal Economic Advisor was last held by Dipak Dasgupta, a former Lead Economist for India and South Asia at the World Bank.