With Indian central bank chief down, maverick politician guns for finmin aide

By Manoj Kumar

NEW DELHI (Reuters) – Fresh from claiming the scalp of Reserve Bank of India Governor Raghuram Rajan, a Hindu-nationalist politician has turned his fire on a top finance ministry adviser who once worked with Rajan at the International Monetary Fund.

The attack by lawmaker Subramanian Swamy fuels concern that his real target is Finance Minister Arun Jaitley, whose relationship with Rajan, while never warm, helped steady public finances, cut inflation and keep Asia’s third-largest economy on the move.

Swamy, a maverick lawmaker from Prime Minister Narendra Modi’s ruling party, took a potshot on Wednesday at Arvind Subramanian, an economist formerly based in the United States who is Jaitley’s top economic adviser.

“Sack him!!!” the 76-year-old politician said in a volley of tweets to his 2.8 million followers, accusing Subramanian, before he joined the Indian government, of backing Washington in a row over intellectual property rights and mocking Modi’s role as chief minister of western Gujarat state.

Responding, Finance Minister Arun Jaitley stood by his aide and upbraided Swamy for attacking an official who was not in a position to defend himself publicly.

“The government has full confidence in chief economic adviser Arvind Subramanian,” Jaitley told a news conference.

Finance ministry officials who spoke to Reuters on condition of anonymity, because of the sensitivity of the situation, said they feared Swamy enjoyed the tacit backing of senior figures in Modi’s Bharatiya Janata Party (BJP) and government.

POLICY FERMENT

Rajan dropped a bombshell last weekend when he announced that he would not make himself available for a second term as RBI chief, raising questions over whether India’s newfound commitment to sound money and low inflation would outlast him.

His departure followed a vitriolic public campaign waged by Swamy, whose roughhouse politics is backed by a fierce intellect – he obtained a doctorate in economics and taught at Harvard. Swamy has also advertised his own credentials to become India’s finance minister.

In an open letter to Modi a month ago Swamy, just appointed to a seat in the upper house, accused Rajan of being “mentally not fully Indian” and demanded he be terminated immediately.

Swamy did not respond to calls and text messages sent to his mobile telephone.

The broadside comes amid uncertainty over who might succeed Rajan at the central bank when his term expires in September.

Arvind Subramanian, the economic aide, and Shaktikanta Das, economic affairs secretary at the finance ministry, have featured in market speculation on possible contenders for the top RBI job.

Both were, however, notable by their absence from a long list of candidates obtained by Reuters after Rajan withdrew his name, an indication of concern in the Modi camp that hiring a finance ministry insider could lead it to exert undue influence over the RBI as an institution.

(Additional reporting by Tom Lasseter; Writing by Douglas Busvine; Editing by Clarence Fernandez)