‘Law reforms feasible through executive action’

The 2013 Act on land acquisition undermines growth, says Arvind Panagariya.— PHOTO: V. Sudershan  

Columbia economist and NITI Aayog Vice-Chairman Arvind Panagariya , who is one of Prime Minister Narendra Modi’s key advisers on policy matters, took out time to answer questions from Puja Mehra and TCA Sharad Raghavan on reforms, growth and the shaping up of the NITI Aayog. Edited Excerpts:

If the Union government dilutes the provisions of its land acquisition Bill, and with the ordinance on it having lapsed, industry is likely to feel let down. What would be your recommen-dation to the Centre and the States on the way forward?

The issue is not industry being let down, but setback to job creation and poverty alleviation. Rapid growth during the 2000s has given rise to an aspirational India. Many among the poor, including marginal farmers and landless agricultural workers, now seek superior economic opportunities. Job creation at decent wages for these groups requires rapid growth in not just agriculture but also industry and services. The 2013 Act undermines such growth.

One way to make land acquisition less time-consuming is for the States to proceed with their own amendments to the 2013 Act under Section 254(2) of the Constitution. Tamil Nadu has already done this; its amended law has been in force since January 5, 2015. The amendment inserts a State-specific schedule, Fifth Schedule, into the 2013 Act as it applies to Tamil Nadu. State legislation listed in this schedule is exempt from the Act. Other States could follow Tamil Nadu or adopt an alternative amendment along the lines of the Central Ordinance with good prospects for Central approval.

What should be a pro-reforms government’s strategy in the face of disruptions in Parliament? Are non-legislative decisions an option that can deliver more than incremental results, especially for achieving double-digit growth rates?

A variety of avenues to reforms exist. First, with rare exceptions, parties would ultimately come together to pass legislation critical to national interest. Politics may reinforce the good intentions since Chief Ministers from Opposition parties must also want development-friendly reforms so as to win their elections. Second, in cases such as the GST [Goods & Services Tax], perceptions and interests of States differ, making consensus more difficult. But progress can still be made through compromises. Third, there are subjects such as land leasing and marketing of agricultural produce on which State Assemblies can pass legislation on their own. Fourth, subjects such as land acquisition and labour laws are on the Concurrent List, where the States can amend the laws as long as the Central government approves them. Finally, reforms to some important laws such as the Mahatma Gandhi National Rural Employment Guarantee Act are feasible through executive action.

How is the NITI Aayog developing as an organisation and moving away from the Planning Commission way of doing things? What changes are this bringing about on the ground?

The Planning Commission as we remember was a 64-year-old organisation while we are barely seven months old. So we are still in our infancy and must go through our share of teething pain. This being said, within the short period of our existence, we have made considerable progress along multiple dimensions.

We are on the last lap of completing the draft of the mid-term appraisal of the 12th Plan. This is a large-scale exercise. We are at a similar stage in completing the drafts of two task forces, one on poverty elimination and the other on agricultural development. Three sub-groups of Chief Ministers on Centrally sponsored schemes, Swachch Bharat, and skill development would soon wind up their reports. An expert committee on innovation and entrepreneurship will shortly be submitting its report to guide our work on AIM and SETU [Atal innovation Mission and Self-employment Talent Utilisation]. Work on the National Energy Policy, electronics industry and harmonisation of regulatory policies across different infrastructure sectors is moving apace. We have launched a new website as also a very exciting web utility called Indian Energy Security Scenarios (IESS) 2047 Version 2.0.

A key initiative of Prime Minister Modi is cooperative, competitive federalism. Accordingly, we are working with the States both proactively and in response to requests from them. We have suggested to the States reforms such as repeal of myriad redundant state laws; streamlining laws and associated rules and regulations; modernising land leasing laws; and updating and digitising land records. We have also kicked off a major study to assess the ease of doing business in different States as perceived by enterprises.

We are also in the process of restructuring the institution. One aspect of this exercise has involved the movement of extra staff from the NITI Aayog to other parts of the government and is nearly complete. The other aspect, building the NITI Aayog into a think tank, is a more daunting task. It requires bringing new talent into the institution. Spotting and recruiting this talent within the existing rules and regulations of the government has its challenges.

Remember that we still have only two Members — an economist and a scientist — compared with eight in the Planning Commission at the time the Prime Minister announced its closure.

What is your view on whether India should give up on insisting that rich countries should pay for climate change mitigation or instead share some of the burden? If it is ok to ask for reparations for past colonial crimes, surely paying for past carbon sins is also ok? What would be your advice for India’s stance in Paris?

Let me first mention our contribution to cutting carbon emissions: we heavily tax petrol, diesel and coal; we have successfully expanded our forest cover and continue to do so despite land shortage; we have invested heavily in public transportation; and we are committed to an ambitious renewable energy programme. Add to this the fact that our lifestyle is far less energy-intensive than most other countries.

The next point is that we have made these efforts notwithstanding the fact that we are a low fourth emitter in terms of total emissions. On the basis of 2012 data, our carbon emissions are just one-fifth of the largest emitter, China, and one-third of the second-largest emitter, the U.S. In per-capita terms, our emissions are tiny and we do not even appear on the top one hundred list.

Coming to your main question, morally and intellectually, there is something very wrong with the argument that developed countries, which have been historically the largest emitters, should not only be exempt from having to pay for the past damage but also be rewarded for it by being allowed a larger share of the carbon space instead of having to share it equally with the rest of the humanity.

Quite apart from the moral case, there is ample legal precedence within the United States domestic laws for compensation for the damage caused by past actions even when the connection between the actions and the damage was not known at the time the actions were taken, as illustrated by the United States Superfund Act of 1980. So, in my personal view, while we must make every possible contribution to the greening of the planet, especially when these contributions are also consistent with our national objectives, there is no reason to shy away from seeking greater carbon space to facilitate our growth and development or from seeking redress for the past damage in the form of finance for, say, adaptation, mitigation and access to patented green technologies.

‘Chief Ministers from Opposition parties must also want development-friendly reforms to win

their elections’