(MENAFN- Gulf Times) Prime Minister Narendra Modi yesterday named right-leaning economist Arvind Panagariya to run his new policy commission, the National Institution for Transforming India (NITI) Aayog, hammering a final nail into the coffin of socialist planning that defined the first 67 years of independent India.
Panagariya, a professor at Columbia University in New York, will head a bench of thinkers comprising fellow free-market ideologue Bibek Debroy and a former top government scientist who designed a nuclear-capable ballistic missile.
The Indian-born economist's calls to roll back the state have influenced Modi's outlook and drawn comparisons, which he rejects, with Margaret Thatcher's attack on labour regulations and state industry in 1980s Britain.
India's first prime minister, Jawaharlal Nehru, adopted socialism to industrialise India after independence in 1947, a route that was later partly abandoned as India fell behind giant neighbour China's rapid economic growth.
But the legacy of central planning survived a round of liberalising reforms in the 1990s in the form of 5-year plans drawn up by a Soviet-influenced planning commission.
India's growth has hit its longest trough since the 1980s over the past two years, a cycle blamed by private economists on a lack of structural reforms to revive investment and create jobs and infrastructure.
"With the appointment of Panagariya and Bibek, the breakaway from Nehruvian socialism is complete," said Rajiv Kumar, a senior fellow at the Centre for Policy Research, a think-tank in New Delhi.
"Knowing both Arvind and Bibek, I am sure they will rapidly push for an open, private sector-led, more liberal order."
Panagariya said last year that he did not support a Thatcherite agenda, saying India should give markets a freer rein but that it still needed growth in social spending in a country that has about a third of
the world's extremely poor.
Panagariya has previously advocated a loosening of fiscal deficit targets that he said were stifling growth to allow for more capital spending.
That view is shared by Arvind Subramanian, another heavyweight economist brought in from the US last year to advise the finance ministry. In a December economic report Subramanian advocated higher infrastructure spending by the government to kick start stagnant private investment.
Their views could be influential as Finance Minister Arun Jaitley prepares his first full budget, to be presented in parliament in February.
Modi scrapped the 65-year-old Planning Commission in the New Year, replacing it with the NITI Ayog, a body he said would do more to involve the states.
The 64-year-old premier will formally chair the new body, which is designed to function as both a think-tank and a policy forum. Panagariya, as vice chairman, would hold cabinet rank.
Modi also named V K Saraswat, ex-head of the Defence Research and Development Organisation, the government's defence research arm, to a full-time post.
Home Minister Rajnath Singh, Jaitley, Railways Minister Suresh Prabhu and Agriculture Minister Radha Mohan Singh will also join the panel.
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