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August 22 2017
I feel very satisfied with what we have been able to do: Arvind Panagariya
08 August 2017

“The function that this institution has to do in terms of planting ideas, we are definitely doing that,” says the first Vice-Chairman of NITI Aayog

The government should have moved faster on resolving the banking system’s non-performing assets (NPA) crisis, though it is finally beginning to tackle them effectively, believes Arvind Panagariya, first Vice Chairman of NITI Aayog that replaced the Planning Commission. Returning to academics at the Columbia University, Mr. Panagariya said he was satisfied with his stint in the government. Excerpts from an interview with The Hindu:

You were entrusted with building an institution from scratch. Are you leaving at a stage where you would have wanted it to be?

Most definitely. This [government] was not a job that I had ever done in my life and this was not an established institution, so there were fears. But you take the plunge. When the Prime Minister asks you to come, do something, it is a huge honour. I feel very satisfied with what we have been able to do in the past over 2.5 years in virtually all directions. We have built the institution from scratch and we have not reproduced the Planning Commission. This is a different institution; it does very different things from the Commission and does them differently.

Just as the Commission continued to evolve with the times I am sure this institution will also evolve and will look a little different 5-10 years later.

What I feel very good about is that gradually, in terms of ideas, we are going beyond what the government may be doing. In our three-year action agenda, we have ideas which may not have immediate acceptance in the government. The function that this institution has to do in terms of planting ideas, we are definitely doing that. What we do is look for ideas which have some receptivity and have the possibility of becoming more acceptable.

You released the three-year action plan. Can we expect the final document after consensus-building with States?

That is too long a process… forging absolute consensus across various governments. If it takes too long, the document would get diluted. We have presented the draft to the governing council. The ministries have also seen it. I wrote to all Chief Ministers seeking comments and several did. We have taken on board several suggestions and will soon be publishing the final document. I want to see it out before I leave.

The other documents (a 7-year agenda and 15-year vision document) require more work. I am not at a stage where I could have finished it before I go. Possibly, I could have produced the first draft but that does not help as my successor has to own that document. It is the wrong sort of a thing to put out the draft before the next Vice Chairman comes in. The new Vice Chairman ought to shape it the way he wishes.

How do you view the overall state of the economy?

I think we are continuing to do reasonably well. I don’t know where the critics come from, but if you look at the three years’ average, growth is 7.5%. I keep getting trolled about how I am wrong. But if you look at 2015-16, there was a time I was saying by Q4, we will be touching 8% and we actually ended at 8.7% and at 8% for the entire year.

Likewise, for 2016-17, people have been saying growth will be chopped of by a large percentage. We got 7.1%. This will still be revised, but certainly the kind of debacle that people were saying and I was contesting… really has not happened.

In the government, I was an optimist, but my optimism has not clouded my judgment. I certainly feel fully vindicated.

Do you see any impact of GST implementation?

We have to wait and see. By all accounts, it seems things are going pretty smoothly. I don’t think this is going to impact the GDP growth rate in any major way. I have been saying that by Q4 or so we should be looking at getting back to 8% growth in a more sustained kind of way.

Could we have been bolder on banking reforms such as reducing government stake in PSU banks?

You have to fix the health of the banks a bit before you go to that next stage of reforms. As soon as I arrived, I was arguing that we need to clean up the NPAs. I think, finally, we are seriously tackling the NPAs. In this area also, there was scepticism, and I hope that it is dying down because the procedure is actually working.

We could have done things faster?

I don’t know if we could, but we should have tried to move faster.

 

 

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