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Poor health of banks, growth rate remain a challenge: Arvind Panagariya

According to Panagariya, the assessment of the government must be based not on what continues to be wrong with the system but on the progress it has made during the last two years.

ET Bureau|
Updated: May 26, 2016, 05.42 AM IST
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According to Panagariya, the assessment of the government must be based not on what continues to be wrong with the system but on the progress it has made during the last two years.
According to Panagariya, the assessment of the government must be based not on what continues to be wrong with the system but on the progress it has made during the last two years.
NEW DELHI: At a time when various Cabinet ministers of the BJP-led NDA government are counting on their achievements of two years in office, a top official of the government said poor health of Indian banks and not so high growth in manufacturing as envisaged remains a challenge for the government, though the progress is in the right direction.

“Challenges such a restoration of the health of banks and accelerated growth in manufacturing as envisaged by the Make in India programme to deliver accelerated job growth remain but the direction of progress is right,” said Arvind Panagariya, vice-chairman, NITI Aayog.

In an occasional paper authored by Panagariya, he has vouched for all the actions by the government as enablers that have taken the economy forward rather than dragging it backwards. “Indeed, after a decade-long pause, the government has returned the economy to the path of reforms. As these reforms accumulate, infrastructure bottlenecks are removed and various programs and missions progress, growth will both sustain and accelerate,” Panagariya said.

According to Panagariya, the assessment of the government must be based not on what continues to be wrong with the system but on the progress it has made during the last two years.

“The government has made substantial progress in removing counter-productive regulations but the task remains incomplete,” he said.

Through the paper, Panagariya underlined the fact that unlike the predecessor government, the present one has introduced no measures such as the Land Acquisition Act of 2013 or retrospective taxation that would require a reversal by a future government, thus justifying the policy actions of the government.

“As the experience with the Rao-Vajpayee reforms forcefully reminds us, there are significant lags between policy actions and outcomes.

Therefore, over time, we will see growth accelerate and sustain and poverty decline,” he has concluded. Taking a jibe at the predecessor government, Panagariya said there were hardly any policy measures under UPA-I that can be credited with having given rise to average 8.4% growth rate between 2004 and 2009.

Defining the UPA-II era as the one that denied clearances to major projects and saw spate of corruption charges that led top bureaucracy into inaction, Panagaiya said the freeze was so deep that even a definite change of course by the present government has not fully assuaged the fears of the top officers when it comes to making decisions on major projects.

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