Across the aisle: Reforms for what — growth or glory?

By: |
November 22, 2020 6:00 AM

"I did reforms" is for self-glorification. "My reforms brought growth" is for the people and for posterity. You be the judge.

I was reminding Dr Panagariya of the gold standard of reforms; I had not "shifted the goalpost", as contended by him.I was reminding Dr Panagariya of the gold standard of reforms; I had not "shifted the goalpost", as contended by him.

I welcome the manner in which Professor Arvind Panagariya has joined the debate on reforms and growth. In answer to my column Reforms and Growth (The Indian Express, October 18), he has penned an article ‘Defending Modi’s Reforms Record’. I am happy that he has kept the debate at a scholarly and civil level.

In my column, I had analysed the five reforms trumpeted by Mr Modi’s supporters. I had concluded that “the ultimate test of a reform is whether it adds to or accelerates the rate of growth of GDP”. I was reminding Dr Panagariya of the gold standard of reforms; I had not “shifted the goalpost”, as contended by him.

Having crossed that diversion, let me turn to the meat of Dr Panagariya’s argument: who delivered most reforms? Note the word “most”. According to Dr Panagariya, the champions were P V Narasimha Rao and A B Vajpayee, and Mr Narendra Modi belongs to that league of two while Dr Manmohan Singh does not. Most economists of the world, including Dr Panagariya’s mentor, Prof Jagdish Bhagwati, would be shocked by that conclusion.

Be that as it may, since Dr Panagariya has used the word “most” — a quantitative measure — we have to list and count the reforms under each prime minister. I had already noted the five reforms that Dr Panagariya attributed to Mr Modi:
1. Insolvency and Bankruptcy Code
2. Farm Laws
3. Labour Reforms
4. Reforming Medical Education
5. Liberalising FDI

For some reason, Dr Panagariya under-emphasised the botched-up GST and hid the disastrous Demonetisation. For the sake of completeness, we must add the two to the five. So, that makes it seven ‘reforms’. I shall not, once again, get into the argument whether ‘Reforming Medical Education’ by constituting the National Medical Commission is a ‘reform’ or whether ‘Liberalising FDI’ can be attributed solely to Mr Modi as if he allowed FDI for the first time.

Remember, we are doing a quantitative count, not a qualitative assessment. The score is seven. Let me now list and count the reforms under Dr Singh as prime minister (2004-2014). Before you read the list, here are several caveats. I have left out reform measures that had run their course, for example, the Banking Cash Transaction Tax that had tracked large withdrawals and deposits of cash. I have also left out measures like the National Manufacturing Competitiveness Council and the Investment

Commission that were very person-centric. Some reform measures were initiated by the UPA but are now known by different names, and they are included. I have followed the tests of longevity and durability of the reform measure.
I shall accept the growth rate numbers given by Dr Panagariya: Narasimha Rao 5.1 %, Vajpayee 5.9, Dr Singh 7.7 and Mr Modi 6.8. Number-wise, the record of Dr Singh’s two terms of five years far exceeds the record of any prime minister. (To be fair to Dr Singh, many of the seminal reforms ushered in during the tenure of Narasimha Rao should also be attributed to Dr Singh who, as finance minister, was the real author.)

Here is a severely limited list of reforms during 2004-2014:
1. VAT, 2. MGNREGA, 3. Aadhaar, 4. Direct Benefit Transfer (DBT), 5. ‘No frills’ or ‘Zero Balance’ bank account, 6. Consolidation of Regional Rural Banks, 7. Right to Education Act, 8. National Rural Health Mission; ASHA, 9. National Urban Renewal Mission, 10. National Horticulture Mission, 11. Weather-based crop insurance, 12. Model law on APMC, 13. National Skills Development Mission & Corporation, 14. CENVAT on all goods and services, 15. Long Term Capital Gains on securities abolished, 16. Introduction of STT, 17. FDI in retail, 18. Private participation in coal mining, 19. Eliminating subsidies for Petrol & Diesel, 20. Gender Budget, 21. Demutualisation of stock exchanges, 22. PFRDA Act, 23. Companies Act, 24. National Food Security Act, 25. Right to Fair Compensation(LARR) Act, 26. Forest Rights Act.

“I did reforms” is for self-glorification. “My reforms brought growth” is for the people and for posterity. You be the judge.

Twitter @Pchidambaram_IN

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1RBI ignores inflation, sticks to growth plan
2End of the road for ENDS! Why we must applaud ban on e-cigarettes
3The ESG-audit edge: They boost firms’ competitive advantage