Economist Arvind Panagariya emphasised that PM Modi’s deeds “look particularly impressive” when taking into account that reforms enacted have been “politically far more contentious than those enacted by predecessor governments.”
Prime Minister Narendra Modi’s credentials as a reformist rivals those of former PMs Narasimha Rao and Atal Bihari Vajpayee, as per Arvind Panagariya, Professor of Economics at Columbia University and former Chief Economist at the Asian Development Bank (ADB).
“Economic reforms enacted during the 10 day monsoon session ending September 23 firmly establish PM Modi’s credentials as a reformist prime minister,” Panagariya wrote in an article for The Times of India on October 15.
Panagariya emphasised that PM Modi’s deeds “look particularly impressive” when taking into account that reforms enacted have been “politically far more contentious than those enacted by predecessor governments”.
“The need for some of his big-ticket reforms had been recognised for nearly two decades, but all prior governments sidestep them on the pretext that there was no consensus,” he added.
For example, Panagariya listed the Insolvency and Bankruptcy Code (IBC) and pointed out the “glacial pace” at which such cases were dealt with – as documented by the 2000 Justice VB Eradi Committee. Eradi also recommended a law along the lines of the United States Bankruptcy Code in 2008, a move not acted on before 2016, he noted.
He also spoke about labour law reforms, which have been held back since 1991, which was when PM Rao first implemented the first set of reforms. He also criticised the UPA government for failing to introduce labour reforms during its 10-year rule, adding: “genuine wide-ranging reforms have come only now, with the Modi government replacing 29 disparate and occasionally contradictory labour laws by four considerably more coherent labour codes that make labour markets far more flexible and employment friendly.”
Marketing of agricultural produce, contract farming and controls on transportation, storage, prices and distribution under Essential Commodities Act (ECA) of 1955 is the third set of reforms Panagariya highlighted.
He noted that while the Vajpayee government initiated reforms in 2003 through a model act, “states only implemented it half-heartedly and the problem remained largely unsolved.”
He listed medical education as the fourth reform area, where the “UPA repeatedly tried and failed to replace the highly corrupt Medical Council of India (MCI) with an alternative regulatory body.”
Panagariya lauded the present government for “entirely new legislation under which the National Medical Commission has finally replaced MCI... passing parallel laws governing education in homeopathy and Indian systems of medicine and laying foundation of a new regulatory architecture in medical education.”
Panagariya also hailed the Modi government’s move to liberalise foreign direct investment (FDI) in civil aviation, coal, defence, e-commerce, mining and railways sectors.
He also termed the goods and services tax (GST), and drop in the corporate profit tax to 17 percent for new manufacturing firms and 25 percent for other firms, as “two truly mega reforms.”Panagariya further acknowledged that while the government’s record is not without blemish, noting its embrace of import substitution and inaction on privatisation, but added that “criticism without appreciation of positive accomplishments misleads rather than informs.”