‘Modinomics’ gets thumbs up from Arvind Panagariya
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 Indian economy.
“Having inherited an economy with low growth, high inflation and large fiscal deficit, the government has successfully stabilised it,” said Panagariya, the Jagdish N. Bhagwati Professor of Indian Political Economy at Columbia University.
The remarks could bolster the claims of the government of successfully managing the economy. At the same time, they may invite criticism from the 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 and implementation of the GST. In a paper published on the Columbia University website, Panagariya claimed that 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
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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 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 that the centre 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.