Panagariya recommends aggressive privatisation of public sector undertakings

The next government must show strong commitment to fiscal consolidation, consolidation of central ministries, aggressive privatisation of public sector undertakings and creation of a new international trade negotiation entity to fast-track the economic growth of the country, eminent Indian-American economist Arvind Panagariya has said.

Panagariya, who served as the first Vice-Chairman of the NITI Aayog from January 2015 to August 2017, was responding to a question on what should be the priorities of the government to be formed after the declaration of the election results on May 23.

“Show strong commitment to fiscal consolidation to ensure that the private sector is not starved of investment funds,” Panagariya told PTI.

Reducing the number of central ministries to 30 is another important thing that the new government should do to bring it in line with international standards and improve the efficiency of governance, Panagariya said.

“India has more ministries than almost any other country. Most of the well governed countries have 30 or fewer ministries, whereas India has 50 plus, he said.

“Too many ministries lead to multiple agencies with competing interests in nearly every policy issue, slowing down, even impeding, desirable change. Numerous sectoral ministries (steel, textiles, telecom, IT, electronics, chemicals, fertilisers, mines, heavy industries, public enterprises, food processing, and MSME) also become focal points for narrowly defined industry interests,” he said.

Recommending privatisation of public sector undertakings -- one PSU per week -- he said this is feasible since more than two-dozen PSUs already have Cabinet approval. “Privatise Air India,” Panagariya said.

Banking Regulation Act

In the first 100 days, Panagariya also called for amending the Banking Regulation Act through an ordinance to allow the Reserve Bank of India to restore its February 12, 2018, circular or equivalent, aimed at putting a lid on the future creation of non-performing assets (NPAs).

“Accelerate cleaning up of NPAs and infuse capital into Public Sector Banks (PSBs) to ensure that healthy credit growth returns,” he said.

Strongly advocating continued movement on lateral entry in the civil services, the former vice-chairman of the NITI Aayog sought the increased role of Young Professionals in ministries, to inject young blood in governance.

“Announce the intention to introduce a sunset clause on centrally-sponsored schemes and central sector schemes and begin an audit towards that objective, he said.

“Create a new entity in charge of negotiating trade agreements and place it in the Prime Minister’s Office along the lines of the USTR (US Trade Representative),” Panagariya said.

Among the longer-term reforms, Panagariya recommended reform of labour laws. “Reform of land laws relating to acquisition, conversion of land from one use to another, tenancy and rental laws,” he said.

COMMENT NOW