C Rangarajan, 76, chairman, of Prime Minister Manmohan Singh's Economic Advisory Council (EAC), has resigned from the post.
He is expected to get a Parliamentary berth and may perhaps be elevated to the Union Cabinet with responsibility for an economic portfolio.
Economist Suresh Tendulkar, who is currently a member of the Council, is taking over as the new chairman. When contacted by Business Standard, Tendulkar confirmed that his elevation.
Tendulkar, a Ph. D in economics from Harvard University, is a part time member of the EAC since January 2005. He is also the part time chairman of the National Commission on Statistics from July, 2006. He is also on the central board of directors of the Reserve Bank of India from June 2006.
Rangarajan, an illustrious economist, who has also served as Andhra Pradesh governor and chairman of the Twelth Finance Commission, is believed to be headed for the Rajya Sabha, which saw a vacancy after the death of veteran Gandhian Nirmala Deshpande earlier this May.
Although there is no rule against the elevation of a nominated member to the Cabinet, Parlimentary experts say by convention they are not made ministers. In the past, only two nominated members had been so elevated. One of them was Maragatham Chandrasekhar in the 1970's and the other was Nurul Hassan in the 1960's. However, following an uproar both were made to resign and were reinducted into the council of ministers after they became elected members of the Rajya Sabha.
Rangarajan also served as Reserve Bank of India Governor between 1992 and 1997. He was instrumental in enhancing the bank’s autonomy and helped put in place a monetary policy regime to boost growth.
The EAC is preparing its annual review of the Indian economy for 2008-09, which is likely to be released here this Wednesday.
On Wednesday, Rangarajan had said the Indian economy is expected to grow 7.5 to 8.0 per cent in 2008-09, slower than the RBI’s estimate, while inflation would cool by the end of the financial year.
In its 2007-08 review of the economy, the Council had cautioned about several perceptible risks for the economy in 2008-09 and had predicted that there would be continued inflationary pressure.