Eminent economist Parthasarathi Shome will be the new advisor to Finance Minister P Chidambaram. He succeeds Vijay Kelkar, whose term ended on August 31.
Kelkar was appointed in the rank of a minister of state by Jaswant Singh, the finance minister in the National Democratic Alliance government.
Shome's appointment, which was cleared last Sunday, would be in the rank of secretary, sources said.
Earlier, Shome worked for International Monetary Fund as director and headed a committee that suggested sweeping tax reforms during the Tenth Plan period of 2002-07.
A former ICRIER professor, Shome had suggested early implementation of Value-Added Tax, enlarging the service tax net and curtailing government expenditure on wages and subsidies to bring down fiscal deficit.
An advocate of reforms, Shome had once said that modern India needed to take a leaf out of the timeless work of Arthashastra, in which Kautilya stressed on the importance of increasing savings and curbing expenditure to sustain the economy. "This diktat holds true even after 2000 years," he had said.