Arvind Panagariya exits NITI Aayog: Narendra Modi govt loses champion of 'Gujarat model'

Long before Narendra Modi catapulted to the national scene and won the parliamentary election with a thumping majority in 2014, Jagdish Bhagwati and Arvind Panagariya, two accomplished economists with a right-of-centre leaning had been talking about the Gujarat model. In their well-researched articles, other forms of writings and speeches they had been talking as to how India could be transformed to become an economic powerhouse if the government pursued the right path. They had also been providing a forceful counter to Nobel laureate Amartya Sen who by then had become one of the most vocal opponents of Modi and a professed supporter of Rahul Gandhi. When Modi decided to abolish Planning Commission and create a body called NITI (National Institution for Transforming India) Aayog by an executive resolution on 1 January, 2015 one of the two — Bhagwati or Panagariya was perceived natural choice to head it. Sources said since Bhagwati was over 80, it was his considered view that a younger Panagariya in his early 60s would be better suited to hold that position.

To Panagariya’s credit, several of NITI Aayog’s inputs were incorporated into Modi government’s policies on economic reforms. Take for instance, the proposal to merge rail budget with annual budget, advance date of presentation of budget so as the new financial year for the government could well and truly begin from 1 April, and the work is on progress on his proposal to change the financial calendar from 1 April to 31 March to 1 January to 31 December. Disinvestment of Air India was NITI Aayog’s proposal, which the government is following with certain pace. There are also suggestions that some important cabinet notes were drafted by NITI Aayog instead of ministries concerned and later given to the ministry concerned for further perusal as per the laid out norms. In the last two years, Panagariya had become the face of Modi government’s economic reforms and his departure from NITI Aayog and as such from the policy making process, as also from being one of the principal spokespersons of the government on economic issues would be a setback for the government. More so, because he was handpicked by Modi to be vice-chairman of a body which the prime minister himself heads. Panagariya would continue to serve the institution till 31 August and thereafter the outgoing NITI Ayog vice-chairman would be free to move on to his next destination. Sources said Panagariya first met the prime minister about a month and a half ago to discuss the issue, “with the request to relieve him from his current duty” so as to he could return to his “first love”, academics. Panagariya was a teacher in economics at the Columbia University before he joined the government. He has held important positions in the World Bank, International Monetary Fund, Asian Development Bank, UN and so on. Panagariya in his informal interactions with certain people has maintained that he was missing academia and was getting reminders from authorities, faculty and students in Columbia University urging him to clarify when he could possibly return to teaching. But that seems to too simplistic an explanation for his premature exit from a post, which meant a lot for him and for the leader who had chosen him to be at the helm. Was he seen to too much of a rightist when in some key economic areas government was actually pursuing socialist policies? Was there a latent tension in NITI Aayog, which also has a high profile CEO Amitabh Kant and three full-time members including Bibek Debroy, Ramesh Chand and VK Saraswat? It would be a matter of immense interest in the government and business circles as to whom Modi chooses to replace Panagariya and how soon he decides to name a replacement. In mid-June, another high profile appointee of the Modi government Mukul Rotagi had requested the government not to renew his tenure as attorney general because he wanted to return to private practice.