Why did Arvind Panagariya resign?

Niti Ayog Vice Chairman

Of late, the Niti Aayog Vice-Chairman was not seen warming the cockles of the Sangh Parivar

Arvind Panagariya was one of the early supporters of Narendra Modi from the academia. A noted economist who was teaching at the Columbia University in New York, Panagariya strongly defended the Gujarat model development at a time Modi was trying to sell it to the nation. Once the BJP came to power, Prime Minister Modi handpicked Panagariya to lead Niti Aayog, the government think tank that replaced the Planning Commission. Given his bonhomie with the Prime Minister and the influence he wields over the government’s policy-making ecosystem it surprised many when Panagariya announced his resignation on August 1 as the Vice-Chairman of Niti Aayog.

Panagariya, a former chief economist at the Asian Development Bank, did not have a fixed term at the NITI Aayog. But going by the convention of the Planning Commission, where the Deputy Chairperson’s term was coterminous with that of the Prime Minister, who’s the Chairman of the body, Panagariya had at least 22 more months left at NITI Aayog. According to the economist, he was currently on leave from the Columbia University, which has refused to extend it further and therefore he was quitting. He would leave Niti Aayog on August 31. After Raghuram Rajan, the former governor of Reserve Bank of India, Panagariya is the second high profile academic-economist in recent history to quit a top government job in India to return to the teaching profession in the US. In the case of Rajan, it was evident that he and the finance ministry had differences and that the government was not very keen to extend his term. Panagariya was not facing any such term issues.

It could be true that Panagariya’s leave from Columbia was expiring. But was that the only factor behind his decision to quit the Modi government? It is difficult to believe that the man chosen by the Prime Minister to lead the institution he established replacing the decades-old Planning Commission, which was the symbol of policy planning in old India, quit the government half-way just to go back to academics. The Indian Express reported on August 2 that tensions were rising between Panagariya and other powers centres within the government over certain policy issues. In January, Panagariya wrote to Modi, highlighting the need to formulate rules to make sure that people are not suffered for depositing demonetised currency notes. He suggested that cash deposits up to 2.5 lakh should be made smooth without the bank questioning the taxpayer. He had also differed with Modi over India joining the Paris climate deal. In 2016 September, while speaking at the G20 summit in Hangzhou, he said India was not ready to ratify the Paris pact by the end of the year. But a few weeks later, PM Modi said India would ratify the agreement on October 2. The Niti Aayog was also critical of the pace of economic reforms under Modi. The three-year action plan issued by Niti Aayog in April raised concerns over rising tax disputes and the poor health of the banking sector.

Besides, Hindutva groups had been attacking Panagariya in recent months. In May, Swadeshi Jagran Manch (SJM) co-convenor Ashwani Mahajan wrote a letter to the PM, saying Niti Aayog was “running a corporate agenda”. He also said the think tank was colluding with drug companies to undermine the country’s drug price control regime. “Niti Aayog has recommended that NPPA (National Pharmaceutical Pricing Authority) should be dismantled and there is no need for price regulation. Once it is dismantled, companies will be given a free hand,” Mahajan wrote in the letter and asked for the PM’s intervention. In January, the SJM had organised a seminar to review Niti Aayog’s policies and had come heavily on the think tank. The Bharatiya Mazdoor Sangh (BMS), trade union arm of the Sangh Parivar, had also slammed Niti Aayog in its national conference in May. BMS leader CK Sajinarayanan said, “Major (government) bodies are headed by people imported from outside. This government is following the same policies of the UPA government on financial and economic sector”. It’s unclear whether RSS directly exerted pressure on the government against Panagariya. But it is certain that Sangh had taken a hostile view of him with its outfits repeatedly targeting him and the government seldom came for his defence. It’s to be noted that the government kept mum even when Raghuram Rajan came under repeated attacks by Sangh groups and even by Subramanian Swamy, the BJP’s Rajya Sabha member.

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