Even while the Bharatiya Janata Party has moved the Election Commission to stop the appointment of the Lokpal and the next Army Chief midway through the election, the Centre has made a key appointment in the Finance Ministry.
Ila Patnaik, RBI Chair Professor at the National Institute of Public Finance and Policy and columnist, has been appointed Principal Economic Adviser, a post vacant since November 2013.
What is significant is that Dr. Patnaik has, in her columns, by-and-large concurred with the policy stances of Reserve Bank of India Governor Raghuram Rajan.
“The most important factor that favours success this time is Governor Raghuram Rajan,” Dr. Patnaik wrote days after his 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.”
Her views are in sharp contrast to the BJP’s stated position on Dr. Rajan. BJP treasurer Piyush Goyal recently said in an interview to a business daily: “I think Governor Rajan is only aggravating problems and is making it worse by increasing interest rates … ”
Delhi’s bureaucratic and political circles speculate that if the BJP is voted to office, Dr. Rajan could even be sacked. Days before being appointed Governor, Dr. Rajan, as head of a 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 goes against the projection of Gujarat as a model State by the BJP’s prime ministerial candidate, Narendra Modi.
“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 Ministry, who chose to remain anonymous. Union Finance Minister P. Chidambaram presented the interim Budget in February without a Chief Economic Adviser or Principal Economic Adviser.
Ms. Patnaik did her Ph.D. in Economics from the University of Surrey, Guildford, U.K.
The post of Principal Economic Adviser was last held by Dipak Dasgupta, a former Lead Economist for India and South Asia at the World Bank.
