Panagariya to balance free market concept and social spending

NITI Aayog gets vice chairman and members as govt gets down to budget business

GN Bureau | January 6, 2015



His book ‘Why Growth Matters’ was described by Economist magazine as a manifesto for policymakers and analysts.  Understandably, its author Arvind Panagariya has been appointed by prime minister Narendra Modi as his vice chairman of NITI Aayog.

Panagariya had called for replacement of the planning commission with a lean and thin organization and NITI Aayog looks lean, at least initially. The 64-year-old will formally chair the new National Institution for Transforming India (NITI), which is designed to function as both a think-tank and a policy forum.

Panagariya has been a supporter of liberal fiscal deficit targets that he said were stifling growth to allow for more capital spending.  His market-friendly, pro-growth views could be influential in shaping the first full budget of the Modi government which is expected in February.

Panagariya, a PhD from Princeton University, is currently a professor of Economics and the Jagdish Bhagwati Professor of Indian Political Economy in the School of International and Public Affairs at Columbia University. He was awarded Padma Bhushan in 2012.

"India needed to restore space to markets but that there was still a need for growth in social spending in a country that has about a third of the world's extremely poor," he has advocated.

He has been the chief economist of the Asian Development Bank. He has authored more than 15 books. Why Growth Matters was written jointly with another renowned economist Jagdish Bhagwati.

Panagariya’s scientific papers have appeared in the top economics journals such as the American Economic Review and the Quarterly Journal of Economics while his policy papers have appeared in Foreign Affairs and Foreign Policy.  He has worked for the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD) in various capacities.

He is believed to be a supporter of Gujarat’s model of development.

During an address at Columbia in September 2014, on what the Modi government must do to transform the Indian economy, he suggested that a replacement for the planning commission must be “lean and thin” and had termed as “brave” the decision by Modi to do away with the commission.

Panagariya had suggested that Modi should put in “as lean and thin a team” for the commission’s replacement with 10-12 people and “lots of resources so that they can draw on the experts as necessary” and then periodically that team should meet with the PM and finance minister.

Meanwhile, on Monday the prime minister appointed economist Bibek Debroy and ex-chief of DRDO  and scientist V K Saraswat as the full time members of the NITI Aayog.

Apart from them, among the ex-officio members are union home minister Rajnath Singh, union minister of finance,  corporate affairs and information and broadcasting Arun Jaitley, railway minister Suresh Prabhu and agriculture minister Radha Mohan Singh.

Three union ministers- minister of road transport, highways and shipping Nitin Gadkari, human resource development minister Smriti Z Irani and minister for social justice and empowerment Thawar Chand Gehlot have been appointed as special invitees to the NITI Aayog.

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