Panagariya quits NITI Aayog: Economist leaves behind a
legacy that won't impress many
August 01, 2017
NITI Aayog vice-chairman Arvind
Panagariya's exit is happening at the same time when the
Narendra Modi government at the Centre is in the middle of
executing its economic turn-around plan. It is clearly not a
good time for a key member of the government's intellectual
inner circle to say goodbye to the country unless there is a
compelling reason for it.
And it isn't really clear what really caused Panagariya's exit.
The reason being cited for the exit — his intent to return to
his first love, academia — is a bit surprising, for the simple
reason that Prime Minister Modi himself had handpicked him for
pioneering the new think-tank in January 2015 and the task has
only begun. Panagariya was given one of the most prominent
positions in the government's policymaking machinery, and the
Indian-American economist knew what he is signing up for.
Moreover, during his two-and-half-years at NITI Aayog, the
economist was in absolute agreement with the government on most
policy-economic issues, including the controversial
demonetisation plan. It wouldn't be an exaggeration to say NITI
Aayog often took up the role of government's mouthpiece to
defend its various policy initiatives rather than acting as a
corrective force like it was initially meant to do. Panagariya's
abrupt exit in the midst of critical action, and while working
with a friendly boss is a tad surprising.
It's been a disappointing two-and-a-half years for NITI Aayog.
The institution has largely failed to live up to the initial
expectations, and hasn't evolved as a body that offers
constructive criticism and opportunity for course correction for
the government when policy decisions move in the wrong
direction. Panagariya entered the scene on 5 January, 2015,
after the erstwhile Planning Commission, one of the last symbols
of Nehruvian era policymaking, was scrapped and replaced with a
new body that was hyped as a think-tank that would offer new
thinking to the Modi government. It was meant to shake off the
redundant policy practices and mistakes and replace them with
And in areas of agriculture policy revamp, education, social
sector spending and digital economy, it has done good work. But
it has failed to reinvent itself as an independent voice that
could have guided the government; instead of objectively
analysing proposals and offering constructive suggestions, it
has instead become a follower of the government's ideas.
By its very design, NITI Aayog began as a weaker body compared
with its predecessor — the Planning Commission. The former
didn't have powers to allocate funds, but could only make
recommendations to the government. Funding was the sole purview
of the finance ministry, unlike with the Planning Commission,
which could also allocate funds. Secondly, it couldn't impose
policies for state governments to follow, again something where
the Planning Commission had a strong say.
In short, the Planning Commission was a body with an independent
stature and character of its own, whereas NITI Aayog is a
powerless institution. Panagariya couldn't reinvent the Aaayog,
instead he chose to go with the flow.
NITI Aayog is two-and-a-half years old today, and there are
serious doubts over the scope and relevance of the establishment
with respect to its mandate and efficacy in dealing with state
governments' development plans, particularly given that states
have more say in deciding their expenditure plan, whereas Aayog
lacks major powers.
As Pradeep S Mehta, secretary general of CUTS International,
wrote in Live Mint, "NITI Aayog is yet to institutionalise a
checks and balances mechanism to caution the government about
the claims it makes, and apprise policymakers of the ground
Even the RSS-affiliated Right-wing economic think-tank Swadeshi
Jagran Manch (SJM) was not too impressed with NITI Aayog's
performance. Early this year, during a roundtable conference on
'Two years of Niti Aayog', it was said that NITI Aayog had
"failed to live up to expectations that it would recast India's
economic planning by making it more indigenous".
Did this assessment play a role in spoiling relations between
the Modi government and NITI Aayog, which in turn led to
Panagariya's exit? One needs to wait and watch for more clues.
At one point, Panagariya's name was heard as a contender for the
RBI governor's post following Raghuram Rajan's exit in mid-2016.
His CV was impressive enough to be considered for the post. In
the past, Panagariya has served as a former chief economist at
the Asian Development Bank and has also had stints in various
capacities with the World Bank, International Monetary Fund (IMF)
and UNCTAD. He holds a PhD in Economics from Princeton
University. In March 2012, the government of India honoured
Panagariya with the Padma Bhushan, the third highest civilian
honour in the land. But eventually, the government chose to
appoint Urjit Patel, one of Rajan's deputies, as governor.
As Panagariya bids farewell to his office, his track record
won't impress many. The body was born when the Planning
Commission had almost become a redundant body. As the Live Mint
article, the Planning Commission was "marred by bureaucratic
processes and devoid of fresh thinking. It failed to keep its
ear to the ground". NITI Aayog came into existence with a new
promise. But, in hindsight, it has also failed to offer major
contributions to the government or offer constructive criticism.
The challenge for Panagariya's successor will be to work on
reinventing the body before it turns out to be another Planning
This news item can also be viewed at: