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Panagariya was "unhappy": Modi govt was slow on privatization, babus displayed overbearing presence

Arvind Panagariya with Modi
By Rajiv Shah
Did Niti Ayog vice-chairman Arvind Panagariya, a renowned economist and a close follower of free market wizard Jagdish Bhagwati, resign from his powerful post because he was unhappy with the Narendra Modi government’s “slow” movement towards privatization, his favourite thrust? It would seem so, if what he said two days earlier (July 31) is any indication.
In an interview he gave to a top financial daily, Panagariya said, the Government of India wasn’t moving fast enough on his proposals for privatizing public sector enterprises (PSEs), even though the proposals for closing down sick units have progressed well.
Panagariya, who is professor of economics at the Columbia University, where Bhagwati is also based, said, though the Niti (full form National Institute for Transforming India) Ayog had proposed and the Cabinet “approved” privatization of 17 PSEs, and “some progress has happened”, and “even advisors appointed” in some cases, “in terms of actual sales we have had none.”
Pointing out that while on “closure of sick units” progress is “very good” with 15-20 units being in advanced stages of closure, he said, as for privatization, “progress has been slower”, and the only “major development” has been the move towards privatizing Air India.
Even here, said Panagariya, the matter is currently with the group of ministers, which has yet to decide on “whether 100% of Air India is to be privatised or the government is going to keep some stake”, and “what will be the extent of foreign investment to be permitted and what part of the existing debt will be assumed by the government.”
Meanwhile, sources suggest, the man who strongly opposed quick movement towards privatization was none other than Amitabh Kant, who was appointed as CEO of Niti Ayog, and had begun working as a parallel centre of power.
IAS officials, who know Kant well, have told Counterview, Panagariya’s assertion that “bureaucrats are very important” in India in all decision making suggests the top economist’s dislike for the way Kant was functioning.
A senior IAS official said, “Kant knew pretty well where his interests lie, and could sense the political direction the country would take. Earlier close to the Congress, particularly Sonia Gandhi’s political adviser Ahmed Patel, Kant, who belongs to the 1980 IAS batch, was picked up as CEO of the Delhi-Mumbai Industrial Corridor (DMIC).”
Modi's site praised Amitabh Kant in January 2013
However, said this official, Kant sensed where the winds were blowing as early as 2013, when he came to attend the Vibrant Gujarat business meet under Narendra Modi, then Gujarat chief minister. “Though still under the UPA, he declared the need for a dynamic leader like Modi to lead the country”, the official quoted him as saying, which brought Kant “very close to Modi”.
Modi’s website, in fact, chooses Kant as one of the top CEOs who had participated in the 2013 Vibrant Gujarat meet, praising him for saying, “Gujarat is creating jobs, driving manufacturing and urbanization. In Dholera a new ultra-modern City will come up. The credit goes to the Gujarat team and the dynamic leadership of Shri Modi.”
While Kant was clever enough not to reveal his dislike for PSEs in particular and the government sector in general, Panagariya had made known his views. A top site owned by a powerful business houses quoting the latter to say that he was “against subsidised food and goods, he wants the NREGA to be shut down, he prefers privatisation of public health and education, and he wants new labour laws so that companies can hire and fire at will.”
Panagariya has been quoted as saying in the prestigious journal “Foreign Affairs” as saying, “Labor laws relating to industrial disputes, trade unions, apprenticeship, pensions, provident fund, and insurance have been the major obstacles to the entry of large formal-sector firms into low-skilled labor-intensive industries.”
“Their effect has been reinforced by the absence of proper bankruptcy laws that would allow firms to close rapidly in case of failure”, he said, adding, “For example, in some case, firms with 100 or more workers are not permitted to make layoffs. There are plenty of horror stories about formal-sector firms existing for two years and then taking 20 years to wind down their operations.”

Comments

Uma Sheth said…
Good to know that all Modi's advisers are not spineless sycophants

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