Raghuram Rajan, Nobel laureate Esther Duflo to advise TN govt on economy

DMK wants to revitalize the state’s economy hit by slowdown and the Covid-19 pandemic

Nobel laureate Esther Duflo and former Reserve Bank of India (RBI) Governor Raghuram Rajan will be part of a five-member Economic Advisory Council constituted by the Tamil Nadu Government to advise Chief Minister M K Stalin on economic issues related to the state.

Arvind Subramanian, former Chief Economic Advisor (CEA) to the Union Government, Development Economist Prof Jean Dreze, and S Narayan, a retired Tamil Nadu-cadre bureaucrat who was Union Finance Secretary, are the other three members of the council.

The announcement of the Economic Advisory Council to the Chief Minister, probably the first of its kind in the country, was made in Governor Banwarilal Purohit’s customary address to the 16th Tamil Nadu assembly.

The committee will provide general guidance on economic and social policy, social justice and human development-related issues, in particular matters related to ensuring equal opportunities for women and the well-being of underprivileged groups, read a Government Order (GO) issued after the announcement.

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Finance Minister Palanivel Thiagarajan said the panel was not a “traditional” one-time report submitting committee that is commonly appointed by governments.

“The composition of the committee reflects the economic and political philosophies of the DMK as it has members who have proven track records of working for the underprivileged. They will share their expertise and insights with us. These dedicated individuals will advise the government on various issues individually or collectively, pro-actively or in response to our request,” he told DH.

Experts said the TNEAC promises to be entirely different from panels appointed in the past to study various issues, pointing out that the members would not have agreed to be part of the panel if it was a routine one. They also said the Finance Minister’s stamp was visible all over the committee -- Thiagarajan is a former investment banker who had worked with top financial institutions like Lehman Brothers and Standard Chartered.

A detailed GO said the state’s fiscal situation was precarious with persistent high revenue and fiscal deficits and a large overhang of debt while noting that the expectations of the people are very high that the administration would deliver on faster economic growth, social justice and equity through new programmes and enhanced service delivery.

“In this context, the Government requires expert advice from the best economists available globally, who are familiar with Tamil Nadu, its economy, society and polity, as also the trends in the Indian and global economy,” the GO said.

The council has been tasked to analyse and provide advice on any issue of economic and social policy referred by the Chief Minister or Finance Minister Thiagarajan.

While Esther Duflo is Professor of Poverty Alleviation and Development Economics at the prestigious MIT, Rajan is a former RBI Governor and Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago‟s Booth School.

Subramanian, who was CEA between 2014 and 2018, is a Distinguished Senior Fellow, Center for Global Development Professor at Ashoka University, and Jean Drèze, is currently Visiting Professor at Ranchi University in India. All are authorities in their respective fields.

This is not the first that Esther Duflo is associated with Tamil Nadu – she had been involved in several studies in the past during late J Jayalalithaa’s regime as part of an MoU signed between the state and Abdul Latif Jameel – Poverty Action Lab (J-PAL).