Arvind Subramanian is India's New Chief Economic Adviser

New Delhi: US-based economist Arvind Subramanian has been selected as India's chief economic adviser. The decision comes on a day when Prime Minister Narendra Modi announced an overhaul of labour laws and his government picked Rajiv Mehrish, a bureaucrat from Rajasthan which has pushed dramatic free market reforms, as the new Finance Secretary.

Confirming his appointment in an impromptu news conference outside the Finance Ministry, Mr Subramanian said: "It is a great honour... to serve in a government that has a mandate for reform and change." He said macro-economic stability and creating favourable conditions for investment will be priorities.

Mr Subramanian, a senior fellow at the Peterson Institute for International Economics in Washington, was informally recommended for his new post by Finance Minister Arun Jaitley more than a month ago.

The development economist worked closely with Reserve Bank of India Governor Raghuram Rajan when both were at the International Monetary Fund (IMF).

Traditionally, the chief economic adviser is responsible for producing the annual Economic Survey - a document on the state of economy that underpins the drafting of the Budget - and a mid-year economic update that is presented to Parliament.

Recently, Mr Subramanian criticised the Indian government's decision to derail a WTO deal struck last year to streamline trade procedures by tying it to a separate controversy over food subsidies.

He also criticised Mr Jaitley's maiden budget in July for being too optimistic in its revenue forecasts.

Mr Subramanian was educated in India and Britain and went on to serve at the IMF and at the forerunner to the World Trade Organization, before taking senior academic posts at Harvard and Johns Hopkins universities in the United States.