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Getting states on board for reforms was a tough task: Arvind Panagariya

YB WEB DESK. Dated: 8/31/2017 8:15:27 AM


Arvind Panagariya serves the last day of his term as Niti Aayog vice-chairman on Thursday. As the new vice-chairman Rajiv Kumar prepares to assume the office from Friday, Panagariya tells The Indian Express that instead of advising Kumar, he would brief his successor about the state of the institution letting him set his own priorities for the think-tank’s functioning. Looking back at his two-and-a-half year tenure at Niti Aayog, Panagariya said that one of the tougher parts of his role was getting states on board with concepts of Centre’s reforms, without the leverage of funding that the erstwhile Planning Commission had. Excerpts:
What was your vision for the Niti Aayog and have you been able to achieve that?
The broad vision was very much what the Cabinet resolution had laid down, which was basically the we establish our policy in the central government firmly and we also go back to the states and create the necessary bridges so that we would be useful to the states. Those are the two really key things and on both of them we have really made solid progress. The issue of states was a tougher one because everybody told me that you are not going to go very far because you have no money to give (to the states) and therefore what leverage have you got? But I think we have been able to play a useful role, generally if you ask the states also they will say that we have played a useful role.
How do you react to the government distancing itself from the Niti Aayog’s ease of doing business report instead of owning up to the critical points raised in the report?
We’ve said what needed to be said, the rest I think, the next vice-chairman will take up.
You said you would brief your successor before you demit your office. What are the priority areas that you would lay down for him?
Priority areas are a bit hard to define. The brief really has to be about the state of the institution at the time of his taking over. That description will tell him where we’ve been going, and implicit in that description will be the priority areas. Of course, the new vice-chairman will have his own priority areas, and this briefing will be more about the facts.
Is there anything that you hoped to work on at Niti Aayog but couldn’t accomplish?
I hoped to complete the 15-year vision document and seven-year strategy — that’s the main one. But other than that, we have been able to accomplish a lot of things. If I count what we have been able to do, I think it’s lot more than what I thought I would be able to do when I joined. I feel fantastic that I have been able to accomplished a lot more than I had thought.
What can be immediately implemented from the 3-year action agenda released by Niti Aayog?
Many of the things that can be immediately implemented are already under implementation like issues of closure of sick units, privatisation, medical council, higher education. We recommended several things there and many of these are under implementation. Many a times people ask me to give three things that can be done, my answer is that the government has many ministries and each ministry does its own. It’s not that we pick three ministries and say that we going to first implement their agenda. Land leasing and APMC reforms relating to e-marketplace can also be done.
Has the government been behind the curve on disinvestment front?
This is one area where I have to admit that the progress has been slower than I have been predicting. I have said publicly earlier that I were expecting in 2016-17 some strategic disinvestment taking place and on that I, in the end, have been proved wrong. I would say that (progress has been) slower than I had hoped for. I remain hopeful. Some progress has happened, lot of the transaction advisors have been appointed. Hopefully, the government can still catch the euphoria in the stock markets.
Can the government follow the Air India model of privatisation for at least some of the banks that are in deep trouble?
On that issue, it is not yet the time to take that call. First we have to resolve the NPAs, some recapitalisation, roughly at least the health of the banks has to be restored. Then there is the issue of consolidation of banks and I think that process is also quite important. And then one can assess is it time to now think of greater disinvestment and perhaps even privatisation in some of the banks. But that’s a call at that stage. (The first priority) is restoring the health of the banks because first the credit markets have to be brought to life.
Will the capital requirements of public sector banks balloon in the backdrop of higher provisions that will have to be made for their loan assets going through insolvency process?
Not balloon but what we have suggested there is that in the original allocation that is Rs 70,000 crore, that very likely that larger sums might be required for recapitalisation. Very recently, I think within the last week or ten days, there was a speech given by the RBI Governor (Urjit Patel) and he actually echoed what we say in the three-year action agenda…but otherwise I am very happy personally that the NPA clearing process is really progressing very well, because all the 12 initial accounts that the RBI had identified they had all gone through the NCLT process and now the RBI has brought out a second list. So the first list had NPAs worth about Rs 1.8 lakh crore and this (second) tranche would do another Rs 1.1 lakh crore of NPAs. So that’s huge progress and I have been much more optimistic on this front that the banks will get back in shape and the credit market would then see a huge pick up.

 

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