This morning, a shocking piece of news surfaced that has left many stunned, especially given the ongoing diplomatic tensions with Pakistan. As India tries to counter Pakistan on various global platforms, this incident feels like a major setback. The news is about K V Subramanian, who served as India’s Chief Economic Advisor until 2022. His role was to guide the government on economic matters. After his term ended, he was appointed as India’s Executive Director at the International Monetary Fund (IMF), headquartered in Washington, D.C. This position represents not just India but also Bhutan, Bangladesh, and Sri Lanka. However, on 30 April 2025, just six months before his term was set to end in November 2025, he was abruptly “Sacked“. The Indian government issued a letter stating his termination due to serious allegations of impropriety, misuse of his position, and violation of IMF protocols. This is seen as a huge embarrassment for India, especially since no Indian representative has ever been removed from a multilateral Organisation in such a humiliating way.
Why This Is a Big Deal
This incident is a significant blow to India’s reputation in global institutions like the IMF, World Bank, and WHO. The timing couldn’t be worse, as the IMF is scheduled to hold a crucial meeting on 9 May 2025 to discuss funding for Pakistan. India was expected to strongly oppose this, arguing that Pakistan uses such funds to support terrorism. Without a proper representative, India’s ability to influence this meeting may be compromised. The absence of an Indian Executive Director could weaken India’s diplomatic stance, especially since a non-Indian has been given temporary charge of the role.
What Led to Subramanian’s Sacking?
Subramanian’s actions at the IMF caused multiple controversies:
- Inappropriate Public Statements: In February 2025, he claimed India’s GDP would grow at 8% annually. The IMF’s spokesperson publicly clarified that this was his personal opinion, not the organisation’s view, causing significant embarrassment for India.
- Misuse of Office for Book Promotion: Subramanian wrote a book titled India@100, which envisions India’s future in 2047. He allegedly used his IMF position to promote this book, which is considered unethical and a misuse of his office. This violated the strict professional ethics and protocols of international organisations.
- Violating IMF Protocols: He repeatedly disregarded IMF’s internal rules, including how the organisation functions on a day-to-day basis. This included breaching protocols related to data handling and professional conduct.
- Questioning IMF’s Credibility: Subramanian publicly criticised the IMF’s methods for rating countries’ financial systems, calling them misleading, non-transparent, and unreliable. He even questioned the credibility of IMF’s data-gathering processes, which is highly unusual and unacceptable for someone in his position.
- Advisors’ Controversial Statements: In February 2025, Subramanian and his two advisors at the IMF made on-record comments criticising the organisation’s financial rating methods, further damaging his standing.
These issues were reported to the Indian government at the highest levels, including the Finance Ministry, Foreign Ministry, and the Prime Minister’s Office. The IMF found his behaviour intolerable, leading to his termination. The Indian government’s letter used the term “terminated,” which is rarely used, especially in such high-profile international cases. The Cabinet Committee on Appointments issued the termination notice with immediate effect but chose not to specify the reasons to avoid further embarrassment. On 02 May 2025, the IMF quietly removed Subramanian’s name from its board of incumbency, both online and offline.
Impact on India’s Diplomacy
This is a unique and unprecedented event in India’s diplomatic history. No other Indian representative has been sacked from a global institution in this manner. The incident has damaged India’s credibility in multilateral forums. The government now faces the challenge of appointing a new Executive Director quickly, especially with the 9 May meeting approaching. The current nominee, Ajay Seth, India’s Finance Secretary, is set to retire in June 2025, and it’s unlikely he can take up the role before then. For now, a non-Indian has been given temporary charge, which raises concerns about whether India’s interests will be adequately represented.
The 9 May meeting is critical because India plans to vehemently oppose Pakistan’s funding, citing its support for terrorism. Without a dedicated Indian representative, India’s ability to present a strong case may be weakened. While the government could appoint an interim representative, feedback from the Finance Ministry suggests this is unlikely to happen before the meeting. Even if India opposes the funding, it’s believed that Pakistan will likely receive the financial aid, as India’s opposition alone may not be enough to sway the IMF.
Why Do These Issues Persist?
This incident highlights a broader issue with India’s economic appointments. Critics argue that the government often prioritises loyalty over competence, appointing individuals who act as “cheerleaders” for Prime Minister Narendra Modi’s narrative. Subramanian, for instance, was known for exaggerating economic projections during his time as Chief Economic Advisor. When Modi claimed India’s economy would reach $5 trillion, Subramanian would inflate it to $12 trillion, $24 trillion, or even higher. This pattern extends to other high-profile roles:
- RBI Governors: Several Reserve Bank of India (RBI) governors, such as Raghuram Rajan, Urjit Patel, and others, left before completing their three-year terms. Rajan, for example, reportedly realised early on that he couldn’t work with Modi after the Prime Minister insisted on dictating RBI policies. Patel was linked to corporate interests but also left prematurely. These early exits suggest a deeper issue with the government’s economic management.
- Other Advisors: Arvind Panagariya, another former Chief Economic Advisor, has publicly criticised the government’s lack of transparency in economic data. The government’s economic policies, such as demonetisation, were opposed by the RBI, yet implemented unilaterally, rendering the governors’ roles irrelevant.
The lack of transparency in India’s economic data is a growing concern globally. Critics argue that the government manipulates GDP growth figures and other economic parameters, making it hard to trust official statistics. For example, former Prime Minister Dr. Manmohan Singh once explained that India’s GDP growth was being overstated by about 1.5%. This opacity reflects in governance, with ministers like Finance Minister Nirmala Sitharaman making questionable claims, such as saying the rupee hasn’t weakened but the dollar has strengthened.
The Role of “Cheerleaders”
Subramanian’s appointment is seen as part of a trend where the government selects individuals who unquestioningly support Modi’s narrative. These “cheerleaders” are expected to promote the government’s agenda, even at the cost of professionalism. Subramanian’s behaviour at the IMF—making unauthorised statements, promoting his book, and criticising the organisation—mirrored the unchecked freedom he enjoyed in India. However, international institutions like the IMF have strict protocols, and his actions were not tolerated.
This contrasts with the era of leaders like Dr. Manmohan Singh, who appointed qualified economists with global reputations to such roles. Subramanian, despite being the youngest Chief Economic Advisor, lacked the professionalism required for an international stage. His predecessor at the IMF, Surjit Bhalla, was also a Modi supporter but understood international protocols better and avoided such controversies.
Economic Projections and Narrative-Building
The government’s economic projections have been inconsistent and exaggerated. Modi claimed India’s economy would reach $5 trillion by 2024, but the IMF pushed this to 2026. Other officials and supporters have made even wilder claims:
- Hardeep Puri (Minister): $5 trillion by 2030.
- Anantha Nageswaran (Chief Economic Advisor): $10 trillion by 2033.
- Piyush Goyal (Minister): $13 trillion by 2040, later adjusted to $30 trillion by 2052.
- K V Subramanian: $20 trillion by 2047.
- Vivek Debroy (Economist): $20 trillion by 2047.
- Mukesh Ambani (Businessman): $40 trillion by 2047.
These conflicting figures show a lack of coherence in economic planning. Critics argue that the government prioritises creating a positive narrative over realistic policymaking. This is evident in schemes like Swachh Bharat and Beti Bachao, where significant portions of budgets were spent on advertising rather than actual implementation.
Modi’s Leadership Style
The root of these issues lies in Modi’s leadership style, which critics describe as centralised and dismissive of expertise. A senior business journalist shared an anecdote about Raghuram Rajan, who recalled his first meeting with Modi as the RBI Governor. Previous Prime Ministers sought the RBI’s guidance on policies like repo rates and inflation. However, Modi reportedly told RBI officials to listen to him instead, dictating how the bank should operate. Rajan realised then that he couldn’t work under such conditions, a sentiment echoed by other professionals.
Modi’s supporters argue that his ability to grasp complex issues quickly, claiming he only needs to “glance” at documents, sets him apart. However, critics like Subramanian Swamy, a BJP leader, openly state that Modi lacks understanding of economics and governance. This centralised approach has created a system where only loyalists who follow orders without question are appointed to key roles. Independent thinkers like Rajan, who are globally respected academics, are sidelined or forced to leave.
The Bigger Picture
This incident reflects a broader decline in India’s institutional independence. Whether it’s the RBI, CBI, judiciary, or media, critics argue that Modi’s government demands complete loyalty, leaving no room for independent voices. Subramanian’s sacking is a symptom of this system, where unqualified or overly loyal individuals are placed in critical roles, only to falter on international stages with strict standards.
The government’s response to this crisis will likely be to appoint another loyalist, as Modi’s system prioritises control over competence. However, this approach continues to damage India’s global reputation and economic credibility.
With only five days until the 9 May meeting, appointing a new Executive Director seems challenging. The process is simple – India nominates a candidate, and no selection procedure is required. However, given the circumstances of Subramanian’s termination and Ajay Seth’s impending retirement, the government may not act in time. India could request an interim representative to voice its opposition to Pakistan’s funding, but the Finance Ministry’s feedback suggests this is unlikely.
Even if India opposes the funding, Pakistan is likely to receive it, as India’s stance alone may not sway the IMF. This situation underscores the need for India to appoint competent, ethical, and professional individuals to represent the country globally. The government must now work to restore India’s credibility and ensure such embarrassments are not repeated.
