Handpicked by Prime Minister Narendra Modi in January 2015 to head the revamped version of the Planning Commission, Panagariya wants to return to academia, take up his teaching assignment at Columbia University in New York
In what would come as a major personal setback to Prime Minister Narendra Modi at a time when the Indian economy isn’t showing any great signs of resurgence, Arvind Panagariya has resigned from his role as vice-chairman of the National Institution for Transforming India (NITI) Aayog. An economist of repute, Panagariya will serve in the NITI Aayog till August 31, before returning to his previous teaching role at Columbia University in New York.
In January 2015 when the six decade old Planning Commission was scrapped by the Union government and replaced with the NITI Aayog, Prime Minister Narendra Modi had handpicked Panagariya for the post of its vice-chairman. The revamped think tank, although with powers that were far more curtailed than the ones enjoyed by the Planning Commission, was to act as a policy think tank for the Modi administration and guide it on key reforms in sectors like the economy, agriculture, federal responsibilities, et al.
However, at a time when the government continues to face tough questions on its two main reform measures – demonetisation and the GST regime – Panagariya’s exit could come as a personal setback for Modi.
Going by the convention followed by the erstwhile Planning Commission, the term of the NITI Aayog vice-chairman was to be co-terminus with that of the Prime Minister, who is the Chairperson of the body.
What triggered Panagariya to actually put in his papers is not known. The official reason being stated is his desire to return to academia but that does not seem entirely believable. “My leave in Columbia University is coming to an end on September 5 and I decided to join back,” was all that Panagariya said about his resignation on Tuesday.
Going by Panagariya’s record in office, he seemed perfectly in-sync with the Modi government’s actions on the economy and general policy legislation – something that previous heads of the Planning Commission didn’t always seem to care about while speaking on the initiatives of respective governments of their time.
Sources say Panagariya, despite the unwavering support of the Prime Minister, had several detractors within the Union government, and perhaps more importantly, in the Rashtriya Swayamsevak Sangh. His advice to the government to revamp labour laws and take an aggressive step on elimination of subsidies of all kinds was something that the RSS and some members of the BJP and its government did not find palatable.
At NITI Aayog, Panagariya oversaw several critical reforms that the Modi wanted to bring about, including the merger of the railway and general budgets, change of financial year from April-March to January-December and the elimination of the 5-year plan system of policy making.
Panagariya, a PhD from Princeton University, is a protégé of internationally renowned economist Jagdish Bhagwati and was Professor of Economics and of Indian Political Economy at the School of International and Public Affairs, Columbia University before he was persuaded by Modi to return to India and head the NITI Aayog.