Without 220 seats, BJP can't implement reforms agenda, says economist Arvind Panagariya

If the Bhartiya Janata Party has to come to power and form a stable government, it needs at least 220 seats, according to Arvind Panagariya, Professor at Columbia University. Anything less, for example winning about 180-190 seats will put BJP on a shaky ground leading to a coalition government with the possibility of fresh polls in a few years time, he said in an interview with CNBC-TV18.

So while Panagariya is batting for Narendra Modi as the next Prime Minister, he has cautioned that without 220 seats, the economic reforms agenda cannot be duly implemented

[caption id=“attachment_79018” align=“alignleft” width=“380”]  ARVIND PANAGARIYA[/caption]

Panagariya said India will have lots to lose if a coalition government is formed at the Centre, particularly on the reforms front. But if the BJP comes to power as a majority, he believes the party will tackle food inflation differently and change the form of subsidies doled out to various sectors without necessarily shrinking it.

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But they may eventually like to move to cash transfers, Panagariya clarified.

Speaking about reforms in the banking space, Panagariya said the new government must adopt a more liberal approach on new bank licenses. He also added that recapitalization of public sector banks is a must for their functioning.

“Infusion of capital, encouraging banks to raise their own equity are options to help banks.”

The Professor also lauded central bank governor Raghuram Rajan for his foresight while adding that the Reserve Bank has been relatively independent and no sensible government should change that.