Panagariya has tough tasks ahead
9 Jan 2015 7:32 PM GMT
Exit Nehru-Indira Gandhi era’s most pet and powerful Planning Commission. Enter NITI Aayog, Prime Minister Narendra Modi’s economic development policy think tank. Set up by a union government resolution in March, 1950, the Planning Commission, under prime minister Nehru as its first chairman, was designed to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community as its principal goal.
It was assigned with the task of assessment of all national resources, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and prioritizing their implementation. It designed the national financial resource mobilization plan, followed by sectoral and state level allocations. It may be important to briefly know the history of the now-dead planning commission before assessing the need for NITI Aayog and its relevance to the present day situation under the BJP-led NDA rule.
Nehru’s Planning Commission decided on sector-wise capacity needs leading to the letter of intent (LoI) and industrial licensing system. The system along with one of its major bi-products, the industrial policy resolution (IPR) in order to promote the state-funded and controlled enterprises (PSUs) to ensure rapid growth and choked private enterprise by limiting its asset and entry restriction, had a 15-year uninterrupted run till 1965 Indo-Pakistan war.
Thereafter, the weaknesses of the so-called government economic think-tank were first exposed as the great planners failed to have a Plan-B to fight emergencies such as drought, inflation, currency devaluation and financial resource erosion. After Nehru’s death, the five-year plans were reduced to one-year plan until his daughter was firmly in saddle as the prime minister and planning commission chairman to start India’s fourth five-year plan in 1969 and subsequent restrictions on both Indian and foreign private investment into the economy. Three five-year plans later, the eighth plan again failed to take off in 1990.
Though prime minister Narasimha Rao did not have the courage to formally dump the Congress legacy and half heartedly relaunched the eighth five-year plan in 1992 alongside the World Bank-IMF prompted market-friendly economic reform, it lost its power and relevance ever since. The sickly 64-year-old Yojna Bhavan was slowly in comatose until Prime Minister Modi applied euthanasia and sent it to the grave and replaced it with a new baby, NITI Aayog. A baby it is. Career economist Arvind Panagariya, the newly appointed vice chairman of NITI Aayog, was not even born when the old planning commission was set up. But, being young, modern and close to Narendra Modi can’t be held against him and his ardent desire to serve the country by fixing a new model that will speed up the process of development and social justice.
However, given the complexity of the country, its federal structure, multi-party political system, the growing challenge of minority management and a basic Nehru-era flaw underscoring the issue of poverty before caste, religion, region and domicile considerations, it will be rather to early to predict Panagariya’s ability to profile a central policy framework that will create an effective roadmap to guide the political executives of the NDA government, several of them being the ex-officio members of the Aayog, to help the prime minister and his union cabinet convert pre-election pledges before the public into performance.
Eminent non-government economists, including Nobel laureate Amartya Sen, and critics among social scientists have strong doubt about the usefulness of a blatant application of the principles of market economy at India’s current level of development that require more attention to poverty alleviation, gender inequality, education, healthcare, social justice and support to the old and handicapped.
Will Panagariya’s reputation as a staunch market economist and growing up under the shadow of neo-liberal laissez faire champion Jagdish Bhagwati stand in the way of creating an effective Niti (policy) that will do Nyaya (justice) to the hitherto neglected foundation of development? Will Aayog be able to show the way of creating 100 million jobs by 2019 that his master, Narendra Modi, promised before the youth at election rallies? Will the new vice chairman of the supreme policy making body be able to help the BJP government implement its promises listed in the election manifesto? BJP had promised to lower inflation by taking steps such as; special Courts to stop hoarding and black marketing, setting up a Price Stabilisation Fund, evolving a single ‘National Agriculture Market, leveraging on technology to disseminate real time data, area specific crops and vegetables linked to food habits of the people. The party said it would accord high priority to job creation and opportunities for entrepreneurship. For the same, it has talked about steps such as labour-intensive manufacturing, focus on traditional employment bases of agriculture, upgradation of infrastructure and housing, steps for self-employment opportunities.
Will Panagariya and his whole-time team members be able to chalk out a blueprint for promised administrative reforms? The prime minister has already made a good beginning in this area by trying to digitize all government records, open up government to draw expertise from the industry, academia and society into the services. BJP said that the hallmarks of its governance model would be ‘People-centric, Policy driven, Time bound delivery, Minimum Government, Maximum Governance.’ BJP has said that to eliminate the scope of corruption, it will emphasise on technology enabled e-Governance and simplification of the tax regime. The BJP manifesto called for making centre-state relations smoother by evolving a model of national development, which is driven by the states. Will NITI Aayog be able to create such a model that will be seen as non-partisan by non-BJP states?
It will be unfair to NITI Aayog and its not-even-a-week old vice chairman to answer these questions and address his critics’ concerns. Four years are too short a time to clean up social debris accumulated over six decades. The government will be on the election mode in the fifth year. Fortunately, Panagariya will be in the company of his illustrious new master, Narendra Modi, and BJP’s top bosses such as Rajnath Singh and Arun Jaitley, to fill up his thought vacuum, if any. IPA
It was assigned with the task of assessment of all national resources, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and prioritizing their implementation. It designed the national financial resource mobilization plan, followed by sectoral and state level allocations. It may be important to briefly know the history of the now-dead planning commission before assessing the need for NITI Aayog and its relevance to the present day situation under the BJP-led NDA rule.
Nehru’s Planning Commission decided on sector-wise capacity needs leading to the letter of intent (LoI) and industrial licensing system. The system along with one of its major bi-products, the industrial policy resolution (IPR) in order to promote the state-funded and controlled enterprises (PSUs) to ensure rapid growth and choked private enterprise by limiting its asset and entry restriction, had a 15-year uninterrupted run till 1965 Indo-Pakistan war.
Thereafter, the weaknesses of the so-called government economic think-tank were first exposed as the great planners failed to have a Plan-B to fight emergencies such as drought, inflation, currency devaluation and financial resource erosion. After Nehru’s death, the five-year plans were reduced to one-year plan until his daughter was firmly in saddle as the prime minister and planning commission chairman to start India’s fourth five-year plan in 1969 and subsequent restrictions on both Indian and foreign private investment into the economy. Three five-year plans later, the eighth plan again failed to take off in 1990.
Though prime minister Narasimha Rao did not have the courage to formally dump the Congress legacy and half heartedly relaunched the eighth five-year plan in 1992 alongside the World Bank-IMF prompted market-friendly economic reform, it lost its power and relevance ever since. The sickly 64-year-old Yojna Bhavan was slowly in comatose until Prime Minister Modi applied euthanasia and sent it to the grave and replaced it with a new baby, NITI Aayog. A baby it is. Career economist Arvind Panagariya, the newly appointed vice chairman of NITI Aayog, was not even born when the old planning commission was set up. But, being young, modern and close to Narendra Modi can’t be held against him and his ardent desire to serve the country by fixing a new model that will speed up the process of development and social justice.
However, given the complexity of the country, its federal structure, multi-party political system, the growing challenge of minority management and a basic Nehru-era flaw underscoring the issue of poverty before caste, religion, region and domicile considerations, it will be rather to early to predict Panagariya’s ability to profile a central policy framework that will create an effective roadmap to guide the political executives of the NDA government, several of them being the ex-officio members of the Aayog, to help the prime minister and his union cabinet convert pre-election pledges before the public into performance.
Eminent non-government economists, including Nobel laureate Amartya Sen, and critics among social scientists have strong doubt about the usefulness of a blatant application of the principles of market economy at India’s current level of development that require more attention to poverty alleviation, gender inequality, education, healthcare, social justice and support to the old and handicapped.
Will Panagariya’s reputation as a staunch market economist and growing up under the shadow of neo-liberal laissez faire champion Jagdish Bhagwati stand in the way of creating an effective Niti (policy) that will do Nyaya (justice) to the hitherto neglected foundation of development? Will Aayog be able to show the way of creating 100 million jobs by 2019 that his master, Narendra Modi, promised before the youth at election rallies? Will the new vice chairman of the supreme policy making body be able to help the BJP government implement its promises listed in the election manifesto? BJP had promised to lower inflation by taking steps such as; special Courts to stop hoarding and black marketing, setting up a Price Stabilisation Fund, evolving a single ‘National Agriculture Market, leveraging on technology to disseminate real time data, area specific crops and vegetables linked to food habits of the people. The party said it would accord high priority to job creation and opportunities for entrepreneurship. For the same, it has talked about steps such as labour-intensive manufacturing, focus on traditional employment bases of agriculture, upgradation of infrastructure and housing, steps for self-employment opportunities.
Will Panagariya and his whole-time team members be able to chalk out a blueprint for promised administrative reforms? The prime minister has already made a good beginning in this area by trying to digitize all government records, open up government to draw expertise from the industry, academia and society into the services. BJP said that the hallmarks of its governance model would be ‘People-centric, Policy driven, Time bound delivery, Minimum Government, Maximum Governance.’ BJP has said that to eliminate the scope of corruption, it will emphasise on technology enabled e-Governance and simplification of the tax regime. The BJP manifesto called for making centre-state relations smoother by evolving a model of national development, which is driven by the states. Will NITI Aayog be able to create such a model that will be seen as non-partisan by non-BJP states?
It will be unfair to NITI Aayog and its not-even-a-week old vice chairman to answer these questions and address his critics’ concerns. Four years are too short a time to clean up social debris accumulated over six decades. The government will be on the election mode in the fifth year. Fortunately, Panagariya will be in the company of his illustrious new master, Narendra Modi, and BJP’s top bosses such as Rajnath Singh and Arun Jaitley, to fill up his thought vacuum, if any. IPA
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