Arvind Panagariya Calls for Dedicated Privatisation Ministry and PSU Reform

Former Niti Aayog Vice Chairman Arvind Panagariya has urged the Indian government to restart its aggressive disinvestment agenda to bolster economic reforms. He argues that reviving the privatisation of Public Sector Undertakings (PSUs) and Public Sector Banks (PSBs) is essential for India's journey toward the "India@2047" vision.

The Case for a Dedicated Privatisation Ministry

In a recent interview, Panagariya proposed the creation of an independent privatisation ministry to streamline and accelerate the government's disinvestment programme. He maintains that the sale of state-owned assets and banks is a fundamental pillar of economic modernisation.

Panagariya emphasized that this reform agenda should remain a priority, regardless of global headwinds such as geopolitical uncertainties or crises in West Asia. By centralising the privatisation process, the government could move away from piecemeal sales toward a more strategic and rapid structural overhaul of the public sector.

Addressing recent concerns regarding capital outflows, Panagariya highlighted the underlying strength of Foreign Direct Investment (FDI) in India. He noted a significant upward trajectory in gross FDI inflows, which rose from $71.3 billion in FY24 to $80.6 billion in FY25, and is projected to reach $94.5 billion in FY26.

He explained that the recent outflows are not necessarily a sign of weakness but rather a natural lifecycle of private equity. As Indian companies go public through an accelerated IPO market, private equity investors often exit their positions to realise gains. Furthermore, he viewed the rising overseas investments by Indian companies as a positive sign of corporate maturity and global expansion.

Regarding Foreign Portfolio Investment (FPI) outflows, Panagariya suggested that the trend was driven by overvalued Indian equities. However, with a recent valuation correction having taken place, he expects these outflows to stabilize by FY27.

Currency Stability and Export Competitiveness

Panagariya pia alitoa maoni kuhusu Rupee ya India na athari yake katika biashara. Alipendekeza kuwa sarafu hiyo haijathaminiwa kupita kiasi kama ilivyokuwa hapo awali baada ya kushuka kwa thamani hivi karibuni. Aliionya Benki Kuu ya India (RBI) isipingwe "kisaikolojia" kuruhusu rupee kuvuka kiwango cha Rs 100 kwa kila dola kwa muda mrefu.

Mtazamo huu unatokana na hitaji la kulinda mauzo ya bidhaa ya India nje ya nchi. Akionyesha takwimu za kihistoria, alibainisha kuwa mauzo ya nje yalishuka kutoka dola bilioni 310 mnamo 2011-12 hadi dola bilioni 260 mnamo 2015-16 kabla ya kupona na kufikia dola bilioni 320 mnamo 2019-20. Rupee iliyoshuka thamani na yenye ushindani zaidi inaonekana kama chombo muhimu cha kudumisha kasi ya mauzo ya nje.

Mtazamo kuhusu Mfumuko wa Bei na Kilimo

Licha ya wasiwasi kuhusu utabiri wa msimu wa mvua, Panagariya bado ana matumaini kuhusu usalama wa chakula na mtazamo wa mfumuko wa bei nchini India. Alibainisha kuwa utegemezi wa India kwa mvua umepungua, mabwawa ya maji kwa sasa yako katika hali nzuri, na akiba ya kitaifa ya chakula bado ni imara. Alihitimisha kuwa kwa sasa hakuna sababu ya msingi ya kuwa na wasiwasi kuhusu uzalishaji wa kilimo au shinikizo la mfumuko wa bei linaloweza kufuata.

Mambo Muhimu ya Kuzingatia

  • Mageuzi ya Kimuundo: Panagariya anapendekeza kuwepo kwa wizara maalum ya ubinafsishaji ili kuharakisha uuzaji wa hisa katika mashirika ya umma (PSUs) na benki za sekta ya umma.
  • Ustahimilivu wa FDI: Licha ya mtiririko wa mitaji nje ya nchi, FDI ya jumla iko kwenye njia thabiti ya ukuaji, ikitarajiwa kufikia dola bilioni 94.5 katika FY26.
  • Sarafu na Biashara: Kushuka kwa thamani ya Rupee kwa njia inayodhibitiwa kunaonekana kuwa muhimu ili kuongeza ushindani wa mauzo ya bidhaa ya India nje ya nchi.