Jagdish Bhagwati & Arvind Panagariya – Write Economic Policies of Narendra Modi

Two star economists with a free market bent – Jagdish Bhagwati and Arvind Panagariya – appear to be the intellectual godfathers of Progressive BJP led NDA’s forthcoming election manifesto. These gents have published a book in 2013 – India’s Tryst with Destiny – in which they have criticized the UPA’s redistributive policies (Food Security Act, NREGA, etc), declared their fondness for the “Gujarat model” and advocated an economic renewal program centred on cutting universal subsidies, reviving spend on infrastructure, reforming India’s antiquated labour laws and reforming the country’s higher education system.

Both professors have steadfastly supported Narendra Modi in the domestic and international press. Whilst they deny having any official role in the BJP, their press comments suggest that their support has extended to matters beyond economic policy and entered more controversial territory.

So what are the Economic Policies and Roadmap of these intellectuals ?
The broader message seems to be focuses on “intensifying and broadening the growth-inducing reforms”; and Track 2 focuses on “cleaning out and improving the revenue-spending programmes for health, education and public distribution system (PDS).

On Land acquisition reform Based on my reading of their recent book, B-P’s objections to the Act seem to be two-fold: (a) a small minority people (called “holdouts”) should not be able to hold up ‘socially necessary’ projects; and (b) land should change hands at market prices as opposed to the 4x market prices requirement of the recently enacted legislation.

Banking reformsB-P seem to be pushing for a quick recapitalisation of banks. Secondly, post such a bank recap, B-P are advocating that PSU banks be given more freedom to function. Thirdly, the BJP has its own ideas on how bank licenses should be given. In particular, although it is not clear how the BJP proposes to grant bank licenses, the BJP does not agree with current criteria laid out by the RBI for granting bank licenses.

Labour reform: They want to see extensive labour reform including reforming the 1974 Industrial Disputes Act (which makes it difficult to sack workers), the 1948 Factories Act (which burdens small manufacturers with myriad regulations) and the 1926 Trade Unions Act.

Infrastructure unblocking: Whilst several BJP office bearers and B-P have said publicly that the whole process of expediting infra projects – from acquiring land for the project to getting environment clearances to co-ordinating sign-offs between central, state and local authorities, etc – has to be streamlined with utmost urgency.

Privatisation: B-P’s point here in recent press commentary is straightforward – India needs to restart the privatisation wave that began in the first NDA administration at the turn of the century.

They say repeatedly that they lean in favour of an approach that minimizes the role of the government, or at least requires it to compete with the private sector providers on equal terms. In turn, this choice translates in a heavy
reliance on cash transfers that place the purchasing power directly in the hands of the people.