"Arvind Panagariya praises GST as a defining reform under Modi, crediting it for reducing poverty to 3% in the Prime Minister's economic tenure"
In a recent statement, Arvind Panagariya, the 16th Finance Commission Chairman, has highlighted Prime Minister Narendra Modi's tenure as a transformative period for India's global entry.
Panagariya, who worked with Modi as Niti Aayog's first vice chairman from 2015 to 2017, has expressed his admiration for Modi's policies and outcomes, particularly in Gujarat where he studied the state closely around 2012, alongside Andhra Pradesh and Bihar, during a time when there was a debate about Modi as a possible future prime minister.
One of the most significant reforms Panagariya highlighted was the Goods and Services Tax (GST), which he described as the most transformative reform of Modi's tenure. GST, an extremely difficult reform involving multiple constitutional amendments, state participation, and replacing a myriad of indirect taxes, was a testament to Modi's courage to push through reforms, according to Panagariya.
The success of the GST reform is evident in the widespread reduction in poverty that has occurred in India. The percentage under the Tendulkar poverty line has decreased from 22% in 2011-12 to a mere 3%.
Modi's economic reforms, including Swachh Bharat, development of the northeast, and strengthening defense, have also been discussed with Panagariya early on in his tenure. India has remained broadly open to global trade, with tariffs having come down significantly since 2007.
However, the country is currently at a crossroads due to the United States shaking up the global trading system, and the outcome of ongoing negotiations is uncertain. India is actively participating in global trade realignment negotiations, involving BRICS members (Brazil, Russia, India, China, South Africa), partner countries such as Belarus, Bolivia, Vietnam, Kazakhstan, Cuba, Malaysia, Nigeria, Thailand, Uganda, and Uzbekistan, along with representatives of regional cooperation mechanisms and international organizations.
Panagariya described Modi as an "incredible holistic leader" who has advanced policy across multiple fronts. This is evident in India's economic growth under Modi's leadership, with the country now being the fifth largest economy in the world, and expected to become the third largest soon.
Despite criticism that Modi has centralized economic decision-making, Panagariya dismissed this, stating that the prime minister must exercise the authority given to him.
In conclusion, Arvind Panagariya's praise for Narendra Modi's economic legacy underscores the significant strides India has made in the past 11 years. The country, however, faces challenges ahead, particularly in the realm of global trade, and the outcome of ongoing negotiations will be crucial in shaping India's economic future.
