Dr Arvind Panagariya’s economics is based on pragmatism, free market principles and anecdotal experience; not on rigid academic knowledge or theories. In an environment dominated by sycophants, retrogrades and Hindutva votaries, the Prime Minister has finally selected the right man to plan the niti (policy) and riti (culture) of India’s economy.
Panagariya, whose father was a well-known economist during the Bhairon Singh Shekhawat era of the Rajasthan BJP, is a resounding counterpoint to the brand of politics that threatens to derail Modi’s agenda. Panagariya is a liberal, a believer in India’s potential to grow rapidly in double digits, an advocate of power reforms, continuous supply and low tariff and a proponent of low-inventory-fast-delivery model of economics.
His arrival on the Indian economic stage should be good news for consumers, entrepreneurs and the government alike; provided he implements his ideas and gets a free hand.
The first time I had met him --it must have been 2009-10-- he had observed that the global economy was stirring out of recession even when there was no sign of reversal. His rationale: the flights are full; people must be willing to spend.
When Panagariya takes over we can expect him to follow his liberal and consumer-centric ideals: IBNlive
Those were the days of recession, stock market reversals and Ben Bernanke’s (Former Chairman of the US Federal Reserve) pessimistic economic philosophy. Financial institutions across the US were falling because of the sub-prime crisis and the entire world was on the edge.
But Panagariya got it right, at least in terms of market sentiment if not the Indian economy. Though the Indian GDP continued to remain in the 5-6 percent range—primarily because of the Manmohan Singh government’s inefficiency and, as Panagariya said then, the inability to invest in infrastructure - the markets rebounded and stabilized at a point where timely reforms could have been the trigger for another bull run.
When he takes over, we can expect him to follow his liberal and consumer-centric ideals, unless, of course, he has changed his mind or gets bogged down by the likes of the RSS and their Hindutva agenda.
Here are some of them:
# Government must be a big hitter in infrastructure investment: Panagariya always had a grouse against the UPA government that it failed to give out big-ticket contracts for infrastructure projects even when the environment was right and there was no opposition, even from the Left.
So, expect him to advocate aggressively the policy of speedy implementation of projects, both by the Centre and state governments.
# Single-digit is passé, double digit GDP is possible: Panagariya believes that if India gets it right and the global economy doesn’t play spoilsport, a growth rate of 8-9 per cent is possible and even “10-12 per cent” is feasible if we do the right things.
Panagariya feels this can be achieved through government focus on big projects, developing good ports to ensure major brands are not forced to maintain huge inventories, through power reforms, easing of labour laws that allow easy hiring and by creating an environment that allows labourers to seek jobs in the industrial sector instead of farms. He thinks that we can’t become a modern economy unless the nearly 55 per cent labour force that toils in our farms is made part of the industrial economy.
# History is nothing: Panagariya believes in a government that is willing to jettison the past and chart a new course. We may have already seen the impact of his dynamic, forward-looking thinking in the recent changes in the land acquisition laws introduced by the Modi government.
Panagariya is a strong supporter of the principle that the government should back off every time an investor wants to purchase land. He thinks, and rightly so, the buyers and the seller should interact directly for land deals instead of routing the transaction through the government.
So, what can we expect from Panagariya if he has allowed a free run? Liberal investment laws, more freedom to hire and fire, infrastructure boom brought about by increased and faster government spending, more FDI, efforts to bring down budgetary deficit to ensure more money for the social sector, focus on quality education and its availability and, finally, competitive markets that benefit consumers.
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