Dr Arvind Panagariya resigns from NITI Aayog

Who will hold the hand of the emerging giant now?

Business & Politics

News - Biz@India

August 4, 2017

/ By / New Delhi

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Prime Minister Narendra Modi had personally picked Dr Arvind Panagariya as the first vice-chairman of the NITI Aayog

Prime Minister Narendra Modi had personally picked Dr Arvind Panagariya as the first vice-chairman of the NITI Aayog

Dr Arvind Panagariya, vice chairman of the National Institution for Transforming India, also called NITI Aayog, has quit citing his immediate return to academics in Columbia.

The National Institution for Transforming India, or NITI Aayog was set up in 2015 to dismantle the Planning Commission that drew up the five-year plans, based on the Soviet Model. The five-year plan system will be discontinued after the end of the 12th Five-Year Plan in 2017.

It is important to understand that several BJP leaders had criticised the Planning Commission. Prime Minister Narendra Modi had criticised it as ‘authoritarian’ and ‘irrelevant’ to India’s economy.

Former disinvestment minister in the Vajpayee government, Arun Shourie, had dismissed the Planning Commission — set in a hulking New Delhi building with 500–600 employees — as a ‘parking lot’ for political cronies and unwanted bureaucrats.

Modi had personally picked Dr Panagariya, the Indian-American economist and Professor of Indian Political Economy at Columbia University, as the first vice-chairman of the NITI Aayog. Besides Modi and his finance minister, Arun Jaitley, Dr Panagariya was shaping policies and programmes across various sectors.

Now that he is quitting, the question is, where does that leave Modi’s dream for India?

Who is Panagariya?
A doctorate from Princeton University, Dr Panagariya, along with Jagdish Bhagwati, was known for arguing in favour of Modi’s model of development ahead of the 2014 Lok Sabha polls. Under Narendra Modi’s leadership Gujarat was known for its development oriented governance where the people were made active partners and stakeholders in the development journey.

Far-reaching recommendations
Panagariya, who will turn 65 on September 30, oversaw several critical reforms that the Modi government had initiated in the last three years, including plans to merge the railway budget with the general budget, and advancing the budget’s presentation by a month to late January or early February.

Currently, the Aayog is engaged in drafting a 15-year long-term plan that will replace the practice of the five-year plans. The five-year plan system will be discontinued after the end of the 12th Five-Year Plan in 2017.

Dr Panagariya made a case for strategic sale in as many as 44 public-sector undertakings, where the government can reduce its holding below 50 pc by selling its stake, levying cess on telecom services, petrol and minerals—coal and iron ore— to fund the ‘Swachch Bharat’ programme. He detailed a possible roadmap for Air India disinvestment, which included writing off loans to the tune of INR 300 billion.

Dr Panagriya also initiated the process of reforming the higher education sector in the country, the Medical Council of India, University Grants Commission and The All India Council for Technical Education. He worked with the states to modify their land lease laws. He also revamped the Centrally Sponsored Schemes (CSS) whose numbers hovered over 100, and reduced it to 27!

The NITI Aayog vice chairman was also heading a panel to modernise India’s labour data, to give a more realistic picture of the jobs market in an economy characterised by a large informal sector.

The Panagariya-led NITI Aayog has also recommended shifting of the financial year from April–March to January–December, replacing the existing April–March period.

Counting Failures
However, he failed to get the government nod for his pet idea of Coastal Economic Zones (CEZ) on the lines of China; the 15-year vision document is incomplete, the reports on poverty and cast census remain unfinished and the Government has to focus more on mega job creating sectors by reforming the rigid labour laws, particularly in areas, such as leather, gems and jewellery.

Why did he fail?
Despite being the vice chairman of the government’s principal think tank, why did he fail? A few factors seem to have contributed to the process of diminishing returns.
First and foremost, the NITI Aayog did not enjoy the clout that was enjoyed by the Planning Commission. Since it was set up on March 15, 1950, the Planning Commission has not only been making the five-year plans but has also been allocating funds to the states. This helped it to command respect among states and gave it a lot of clout.
Also, despite being the vice chairman of NITI Aayog, with a rank of cabinet minister, Dr Panagariya seldom attended cabinet meetings chaired by the Prime Minister.
In addition, he failed to negotiate through the highly complex bureaucratic maze that rules India’s administrative setup.

Is that all to Panagariya’s term?

All was not well with the doctor’s prescription. Swadeshi Jagran Manch (SJM), an affiliate of the Rashtriya Swayemsevak Sangh (RSS), was displeased with the NITI Aayog’s two important recommendations.

The first was related to the Aayog’s proposal to dismantle the National Pharmaceutical Pricing Authority (NPPA) that controls the price of drugs in India.

RSS as well as SJM had been pressurising the Modi government to make health facilities accessible and affordable to the poor. Under the pressure of the corporate lobby and multinationals, the Aayog was pursuing the dismantling of the price control regime in the country, alleges a senior RSS functionary. To be fair, the NPPA has reduced the prices of several drugs during the last one year, especially drugs related to cancer and heart ailments.

The RSS was also annoyed with the Aayog’s positive stand on genetically modified crops. The SJM had been opposing GM crops for the last two decades.

Pointing out that the key to green revolution was high-yielding crops, the Aayog had said, “It is time for us to return to allow massive research into improving seed varieties, including genetically modified ones.” In an appraisal document of the 12th Five Year Plan, the Aayog said, “Elsewhere in the world, most notably, the United States, GMO seeds have been in use for over two decades with no adverse effects on either crops or those consuming the product of those seeds. China has been far ahead of us in this regard. Our own experience with BT Cotton has been a success.”

Modi Fan
An ardent Modi fan, Dr Panagariya thanked the Prime Minister for the privilege to serve under him. In his resignation letter addressed to the Modi, Dr Pangariya makes two valuable suggestions. He writes:-

During the past two years, the responsibilities of the NITI Aayog have multiplied at a fast pace. This has meant rapidly rising demands on the time of the vice chairman. Simultaneously, under your bold leadership, the stature of India on the global stage has rapidly risen.

Nothing illustrates this better than the attention you received from the world leaders at the recent G20 Summit in Hamburg. This means that going forward, the work of G20 Sherpa would expand. To ensure that the work of the NITI Aayog and G20 engagements receive due attention, it may be worth considering separating these roles in the future. A full-time G20 Sherpa would, in any case, be a necessity if India were to host the G20 Summit in the future.

Who will succeed Dr Panagariya?
There are wide speculations as to who will be the next vice chairman of the NITI Aayog. Names making the rounds include NITI Aayog’s first chief executive officer, Amitabh Kant and chief economic advisor, Dr Arvind Subramanian. Another contender is the Reserve Bank of India’s former deputy governor, Rakesh Mohan. For Dr Subramanian to become the vice chairman then, Kant will have to be given a bigger role.

Among several books authored by Dr Panagariya, The Emerging Giant, is a definitive book on the Indian economy. Published in 2011, the book is a comprehensive account of India’s remarkable growth or the role policy has played in fuelling India’s economic expansion.

Dr Panagariya, who played his short part in steering the future course of the economy, has let go without waiting to really see the ‘giant’ emerge!




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