India's Modi Trusts This Accountant More Than Ivy League Economists

India's Modi Trusts This Accountant More Than Ivy League Economists

By Maroosha Muzaffar

Swaminathan Gurumurthy (left) and Indian Prime Minister Narendra Modi.
SourceGetty Images/Composite by Alex Furuya


Because some of Modi’s most controversial decisions can be traced to this novice.

By Maroosha Muzaffar

When Indian Prime Minister Narendra Modi announced a ban on high-value currency notes in November 2016 — devaluing about 86 percent of the country’s currency overnight — he was acting on an idea pitched by an unlikely adviser some months earlier. Swaminathan Gurumurthy, 69, is no economist, and his understanding of money is rooted in his professional training as a chartered accountant. Yet today, he is a part-time director of the Reserve Bank of India (RBI) and has become one of the most important voices driving economic policy in India — more influential than a group of scholars and economists whom Modi has at his disposal, but has increasingly shunned, even as he heads into 2019’s general elections where the popularity of the prime minister’s economic policies will be tested. 

Gurumurthy’s rise has strong ideological moorings. For decades, he has been part of a subgroup of Rashtriya Swayamsevak Sangh (RSS) — the Hindu nationalist parent body of Modi’s Bharatiya Janata Party (BJP) — called Swadeshi Jagran Manch, which argues for protectionism and against globalization. But his emergence as a close confidant of the prime minister is also driven by his powerful personality. “Gurumurthy is an extremely intelligent man and a very charming person,” says Paranjoy Guha Thakurta, a political commentator and frequent critic of the BJP government’s economic policies. “These qualities, over and above his staunch ideological convictions, helped him reach where he is today.”

The accountant’s influence has been persistent since the Modi government’s earliest days. In 2014, not long after the prime minister took office, the government eliminated the economic Planning Commission and rebranded it as the National Institution for Transforming India (NITI) Aayog, designed to have a “Bharatiya [Indian] approach to development.” Says Thakurta: “Those were the words of Gurumurthy.”

Gurumurthy has spoken out against foreign-educated economists and is a huge believer in economic “self-reliance.”

His hand can be seen in December’s sudden resignation of Urjit Patel as director of the RBI, with the central banker who had clashed with Modi citing unspecified “personal reasons.” Former RBI governor Raghuram Rajan warned that Patel’s resignation is a “matter of grave concern.” When Rajan was in charge, Gurumurthy accused him of destroying RBI’s independence, and of not pursuing “India-centric solutions.” It was part of the intense right-wing criticism faced by the MIT-educated Rajan, now a University of Chicago professor, who was also the youngest chief economist of the International Monetary Fund.

Modi seems to consider prestigious degrees a detriment for his economic brain trust. In August 2017, the chief economist at the Asian Development Bank and a professor of economics at Columbia University, Arvind Panagariya, quit NITI Aayog in the face of Modi’s opposition. Oxford-educated Arvind Subramanian was the chief economic adviser to the government of India, but he too didn’t find much favor with Modi. Departed RBI Director Patel studied at Yale and Oxford.


Gurumurthy, by contrast, was born to a poor family in Tamil Nadu in south India. He secured a scholarship to study for a bachelor’s degree in commerce and later went on to study chartered accountancy after law didn’t work out for him. Vocal against economic liberalism, Gurumurthy is commonly believed to have first met the future prime minister in the 1990s when Modi was an ordinary political worker with RSS, and Gurumurthy acted as his adviser. He has spoken out against foreign-educated economists and is a huge believer in economic “self-reliance.” Gurumurthy’s appointment at the RBI in August despite having no banking experience is viewed by many as part of the Modi government’s goal of taking control of the central bank — and his credibility was questioned heavily on Twitter. (Gurumurthy didn’t respond to a request for an interview.)

One of Gurumurthy’s pet causes is India’s nearly 50 million small and micro enterprises, which he believes will transform the country’s economy. He proposed the Finance Ministry grant low-interest loans to small businesses, says Thakurta, and now it is an official program: the Micro Units Development and Refinance Agency.

On Nov. 15, 2018, Gurumurthy, who is also the editor of weekly political magazine Thuglak and chairperson of right-wing think tank Vivekananda International Foundation, delivered a 90-minute lecture, “State of the Economy: India and the World,” in which he argued that Indian economics was being destroyed by outsiders. “It was a very impressive speech … and a thoughtful one too,” says V. Anantha Nageswaran, dean of the Institute for Financial Management and Research business school. But Nageswaran was quick to say that most of Gurumurthy’s ideas would not translate well in reality.

The Gurumurthy-backed demonetization was lampooned by economists, sparked mass chaos and even resulted in dozens of deaths of people waiting in line to get rid of their bank notes or related causes. And yet two years later, the bespectacled accountant says it was a necessary step to tackle India’s black market. “But for demonetization, the Indian economy would have collapsed,” Gurumurthy said in his November speech, caring not a whit for any so-called experts who disagree.

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(This article has been updated since it was originally published on January 3, 2019.)