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Reforms are working great, but more needed: Arvind Panagriya

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Prominent economist Arvind Panagriya (center) delivering the inaugural New India Lecture Series in New York on January 22.
Prominent economist Arvind Panagriya (center) delivering the inaugural New India Lecture Series in New York on January 22. Moderator Sanjay Bhatnagar (left) and Consul General of Indian in New York Sandeep Chakravorty are also seen.

Noted economist and professor at Columbia University Arvind Panagriya engaged in a wide-ranging conversation on Monday evening at the Indian Consulate in New York.  The backdrop was the start of the “New India” lecture series to highlight the vision of Prime Minister Modi for a “New India” by 2022.

Discussing the larger direction of the Indian economy, Dr. Panagriya expressed optimism both for the near and medium term.  “India is on course to become the world’s fifth largest economy in not too distant future,” he said.  “There was some expected dislocation because of the introduction of GST and the demonetization exercise.  But India is expected to have a growth rate of 7.3% as projected by the World Bank and could easily cross 8%.”

The conversation hovered around the topic of agriculture and the challenges of the agricultural economy.  Dr. Panagriya felt that there should be a stronger emphasis on agriculture including in the upcoming budget.

“Although it contributes to only 15% of India’s GDP, a large part of the population is dependent on agriculture,” he said.  “So both for the sake of the real lives that will be impacted and for political reasons, it will be an important focus area.”

The economist went on to add, “Loan forgiveness is not the solution.  We have to find other ways to make agriculture more viable.” He highlighted schemes such as farm insurance, streamlining tenancy laws, creation of soil cards and other such reforms.  “Karnataka pioneered the E-Auction at the Mandis and it will be great to link the 600 or so Mandis around the country,” he added.

To a question by the moderator Sanjay Bhatnagar of WaterHealth International about the best places in India for investors to invest in, Dr. Panagriya quipped, “Good economists talk about good policies but never say invest in this sector or that sector.”

“There are so many areas that create disproportionately high number of jobs vis-à-vis the investment,” Dr. Panagriya said, lamenting, “But very few big industrialists want to go into those areas. They think garments, footwear, furniture and a lot of consumer goods are not meant for them, despite the huge job creation potential of these industries.”  According to him, this is a long standing problem that has hindered job growth and job creation primarily because the incentives are very limited for employers in these areas.

The last big area that he touched upon was the area of higher education.  “The entire system is beholden to the University Grants Commission, ” he said.  The economist narrated his own experience introducing a new course in Columbia University on Indian Political Economy.  “I wrote a short note on my new course and sent it to the university and it was accepted,” he said. “The course was up and running.  Try introducing a new course in an Indian university!” He implied that one would get lost in the labyrinth of UGC making it impossible to usher in new courses and new realms of learning.

One of the last things that Dr. Panagriya worked on during his closing days at Niti Aayog was a recommendation to the government and concerned ministries to reform higher education in India.  “If those are taken seriously by the government, you will see a lot of changes in the coming years,” he predicted.

Consul General Sandeep Chakravorty welcomed the gathering which included a number of leading academics, industrialists and potential investors.

(Venky Raghavendra is a Contributing Editor. He is Vice-President, Safe Water Network & Advisor to Government of India’s National Skills Development Corporation.)

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