Free-Market Formalised

Free-Market Formalised

 Dr. Arvind Panagariya, the soon to be first operational boss of the brand new Niti  Aayog, is presently  the Jagdish Bhagwati Professor from Columbia University in the US. He earned his PhD from Princeton and is Bhagwati’s leading protégé. He has written ten books, the last of which,  India: The Emerging Giant was described as ‘the definitive book on the Indian economy’ by CNN. 

Panagariya who has been Chief Economist at the Asian Development Bank, has worked in the World Bank, and various United Nations organisations, is steeped in  matters Indian though located in faraway New York. He runs a journal named India Policy Forum and teaches a course at Columbia on the Indian Political Economy.

In fact, the Columbia University professorial duo of Bhagwati-Panagariya have long been regarded as  the preferred economic  ideologues for the Indian right-of-centre that have clustered around the BJP in recent years. 

Originally, the BJP, emerging from the Jan Sangh as the political expression of the RSS, was indeed known as a Party of “Hindu Nationalists”: Traders, the higher castes, cultural chauvinists, majoritarians; but it has drastically remade itself to become far more inclusive lately.

This profound and fundamental change  is evidently confusing its opponents who have long been comfortable branding it ‘communal’, as also its old-style adherents, who are angry at not finding much resonance for their prejudiced views in Modi’s policy slogan of  ‘Sabka Saath,Sabka Vikas’.

The outrage and sense of bewilderment from both sides of the divide is currently in noisy and raucous play. Nevertheless, the shifting of gears, that began decisively with the choice of Narendra Modi as the prime ministerial candidate, has definitely taken place.

The BJP, Government and Party, is now controlled by a post- independence generation, led by Narendra Modi and Amit Shah, with the full approval and support of a revamped RSS led by Mohan Bhagwat . Now, seven months on, with Panagariya tipped to become the first Vice-Chairman of the newly formed Niti Aayog,  the cornerstone to the future direction of our economic edifice has also been firmly set . 

Panagariya  asserts that India can achieve a growth rate of 6.5% in 2015 itself, given a toned up administration and quicker decision- making; a full percentage point higher than other estimates. He plumps for infrastructure development, particularly in the provision of electricity to industry, and believes in empowering the States to compete in the development stakes.  And this idea of competition is the basis of the free-market.

 News of Panagariya’s impending appointments is momentous. For the first time, a free-market economist will be operationally heading the nation’s premier and official ‘think-tank’. It marks a firm departure from centralised planning that has grown ineffective and out-dated.

With the Prime Minister, a former CM himself, as Chairman, several other Union Ministers and all the Chief Ministers on board; the Niti Aayog  will be much more democratic and federalised than its predecessor, both in  its policy prescriptions and decision-making. 

But of course, at first, with the Opposition determined to oppose the Government wherever it can with its filibustering, the Aayog will find greater acceptance in the States ruled by the BJP and its allies in the NDA, and those outside of it, a growing band, leaning towards the BJP led Government at the Centre.

With Panagariya in-charge of operations with full cabinet rank, there is every chance of a number of other notable free-market economists and thinkers being inducted into  Niti Aayog. This will mark a complete departure from the 80s style arch-leftist, bafflingly revisionist and anti-business complexion of the former National Advisory Council (NAC).  

The Modi Government has gradually been moving away from Welfarism as the answer to poverty. This has been aided by a lowering of inflation caused by a dramatic drop in the price of petroleum, metals and commodities. Subsidies and grants, at the core of Welfarism, are, of course, difficult to do away with, until the engines of growth properly kick in; and the Government has been mindful of this. But with the chronic fiscal deficits plaguing our mostly inefficient economy, there is urgent need for a sea- change in policy. With Niti Aayog supported by the Government in the Centre and the States, the entire process will pick up speed.

The Aayog will institutionalise the Modi Government’s commitment to productivity, growth, infrastructure and efficiency, as much better alternatives to socialism and the subsidy Raj.

The Planning Commission, inspired by the USSR in our first flush, has been increasingly less useful since liberalisation began in 1991, and more so as the States of the Union have gained in stature and autonomy. Reduced to irrelevance, it became controversial, gaining some notoriety for making absurd projections and comments on the poverty-line and then seeking to defend it.  In the latter-day, the Commission was also at loggerheads with many of the States.

(806 words)

January 3^rd, 2015
Gautam Mukherjee