The Big Story: Brain drain

Arvind Panagariya, the noted economist, has resigned as vice-chairman of the NITI Aayog, a government think tank built on the ashes of the erstwhile Planning Commission. Panagariya, who along with his economist mentor Jagdish Bhagwati became known as major advocates of Prime Minister Narendra Modi’s Gujarat Model, was appointed to the NITI Aayog in the hope that he could establish an organisation that would challenge, deepen and diversify the government’s policy discussions. Unlike the entity that it replaced, the Planning Commission, which controlled the flow of funds from Centre to state, the Aayog had no finances of its own. All it had were ideas, and a grandiose acronym for a title: the National Institute for Transforming India.

And indeed, Panagariya had plenty of ideas for how to re-think economic policymaking, some of which even filtered through to the government. The Aayog played a part in encouraging the elimination of a separate Rail Budget, a more determined approach to stressed assets, privatisation of various public sector units and more. Its 15-year vision document and three-year action plan spoke of a need to move from revenue expenditure to capital expenditure, alterations in the country’s tax laws, and further reductions to the fiscal deficits of the Centre and the states. Most recently the Aayog made news for working with the health ministry to create a model contract that would permit the privatisation of urban health care. The privatisation of Air India was one of Panagariya’s pet projects, one that he has underlined as a key bit of unfinished business.

So why step down? Panagariya claims that New York’s Columbia University, from which he took leave to work in India, did not approve further leave and that as his age it would be difficult to get a job like that back. These institutions are usually happy to advertise their faculty’s sabbaticals if it means those professors are helping steer major economies, so Panagariya’s comments seem like a weak excuse. Others have speculated about opposition from Rashtriya Swayamsevak Sangh bodies, like the Swadeshi Jagran Manch and the Bharatiya Kisan Sangh, which frequently accused Panagariya and the Aayog of pushing a “corporate agenda” might have had some effect.

The real cause might have been closer to home for Panagariya. The Aayog itself, far from being a disruptive think tank for the government, was often expected to produce rationalisations for government behaviour rather than steer it. The economist was evidently uneasy about the tax department’s approach following demonetisation, and on a few other counts, but did not seem to have the space to express himself. Meanwhile, the appointment of bureaucrat Amitabh Kant to be CEO of the body created another power center, especially when Kant made fanciful statements, such as one predicting that physical bank branches would disappear by 2020.

Attacked by the Right, asked to churn out papers as per government requirements and combating a separate power centre – that combination might have been enough for Panagariya to decide to leave mid-way through his tenure. If Prime Minister Modi genuinely wants the Aayog to be a think tank that is to challenge conventional thought within government spaces and can pave a progressive path for the Indian economy, he would do well to take note of the reasons top economists like Panagariya and former Reserve Bank of India chairman Raghuram Rajan have chosen to return to teaching instead of helping steer the nation to the goals he has envisioned.

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  1. Prasanna S in the Indian Express lists the many, many contradictions in the government’s approaches to privacy and how it sees the Aadhaar project.
  2. “The chief minister’s was a persuasive case for a political initiative in Kashmir without disturbing the constitutionally mandated rules of engagement,” writes Vinod Sharma in the Hindustan Times. “It deserved reciprocation, not the kind of belligerent media response or partisan political reaction it got.”
  3. “Farming is a very risky affair,” says a leader in Mint. “Government policy should focus not just on higher production but also on helping farmers manage risks.”
  4. Radhika Rao in BloombergQuint says that a lower interest rate from the Reserve Bank of India will not lead to much credit growth, but it needs to happen anyway.
  5. Indira Jaisingh writes in the Indian Express on a recent Supreme Court order, which said that the law on cruelty against women is misused: “No effort was made to get a contrary point of view before giving a judgment which virtually rewrote the law and goes consciously contrary to criminal jurisprudence. The sooner the judgment is overturned, the better for the rule of law.”


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