‘Modinomics’ gets thumbs up from Arvind Panagariya
NEWDELHI: Prime Minister Narendra Modi’s government received an unexpected shot in the arm on Wednesday when former Niti Aayog vice-chairman Arvind Panagariya gave it the thumbs up for its management of the economy. “Having inherited an economy with low growth, high inflation and large fiscal deficit, the government has successfully stabilised it,” Panagariya, the Jagdish N. Bhagwati Professor of Indian Political Economy at Columbia University, said.
The remarks could bolster the claims of the Modi government of successfully managing the economy. At the same time, they may invite criticism from opposition, which has persistently claimed that economic growth was yet to recover and the jobs outlook had worsened—especially after the disruption triggered by demonetisation of and implementation of the goods and services tax (GST).
In a paper published on the Columbia University website, Panagariya claimed it was “the first comprehensive evaluation of the economy during the first three-and-a-half-years of the Modi government”.
Panagariya was vice-chairman of Niti Aayog, the policy think tank that replaced the planning commission, between 2015 and 2017.
In his paper, Panagariya said the first three years of Modi’s government had seen a turnaround in economic growth and a reversal in the inflation trajectory.
“During the three full financial years from 2014-15 to 2016-17, the GDP (gross domestic product) has grown at the annual average rate of 7.5%. This is 1.6 percentage points higher than the rate during the last two years of the UPA,” he wrote. Panagariya also argued the govt had successfully contained inflationary pressures and reversed the trajectory. Inflation, which averaged 10.1% in 2012-13 and 9.3% in 2013-14, decelerated to 5.9%, 4.9% and 4.5% in the subsequent three years.