Latest news with #Panagariya
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Business Standard
5 days ago
- Business
- Business Standard
India-US trade deal will be a game changer for investors: Arvind Panagariya
The proposed trade agreement between India and the United States could be a major breakthrough for India's investment climate, said Arvind Panagariya, chairman of the 16th Finance Commission. The deal, currently under negotiation, is expected to significantly liberalise India's trade regime and enhance the country's attractiveness for global investors, he said. 'This will be a big shot in the arm,' Panagariya stated during an interaction hosted at the Consulate General of India in New York this week. Agreement with EU likely to follow US deal Panagariya expressed optimism that the India-EU trade agreement would follow closely on the heels of the US deal. 'Once the India-US trade deal happens, the one with the European Union will also fall into place conveniently,' he said. 'These are the two largest markets. For any future investor, having open access to both will make India an extremely attractive destination.' The economist emphasised that reduced trade friction with the US and the EU would be a game changer, significantly lowering barriers for foreign companies looking to invest in or trade with India. Tariff cuts and liberalisation on the cards Regarding tariffs, Panagariya noted that the agreement would likely involve India lowering some of its duties. 'Potentially, a lot of good can come out of it. India will be reducing its tariffs as part of the process, which in itself is a tremendous opportunity,' he said. Panagariya said the most significant outcome of the trade deal would be domestic liberalisation. Improved access to the US market over competing nations would also be a major advantage. Trump administration signals deal is close US President Donald Trump has repeatedly stated that a trade agreement with India is imminent. As recently as last week, he remarked, 'We're very close to a deal with India, where they open it up.' He has reportedly set August 1 as a deadline for several countries, including India, to finalise trade agreements or face increased tariffs. Trade figures and future targets According to the latest figures, total goods trade between the US and India stood at $129.2 billion in 2024. US goods exports to India reached $41.8 billion, marking a rise of 3.4 per cent ($1.4 billion) from 2023. Meanwhile, goods imports from India totalled $87.4 billion, up 4.5 per cent ($3.7 billion) from the previous year. The resulting trade deficit stood at $45.7 billion. India and the US have also announced a new ambition, dubbed 'Mission 500,' which aims to more than double the bilateral trade to $500 billion by 2030. (With inputs from PTI, agencies)
Time of India
5 days ago
- Business
- Time of India
India-US trade agreement will be big shot in the arm: Arvind Panagariya
New York, The proposed India-US trade agreement will be a big shot in the arm and make India a very attractive location for investors and result in a lot of liberalisation by the country, Chairman of the 16th Finance Commission Arvind Panagariya has said. "A lot of the current things that are underway are very exciting," Panagariya said during an interaction hosted at the Consulate General of India in New York this week. Explore courses from Top Institutes in Please select course: Select a Course Category Artificial Intelligence Data Science Operations Management Data Science MCA others Finance Management Product Management Others healthcare Digital Marketing MBA PGDM CXO Public Policy Degree Design Thinking Healthcare Technology Project Management Data Analytics Leadership Cybersecurity Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details "In particular, I want to mention the US-India trade agreement that is being negotiated. Also, the India-European Union agreement," the eminent economist said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Undo He said that the India-US trade agreement will be a "big shot in the arm". Once the India-US trade deal happens, the one with the European Union will also happen and "that door will open very conveniently," he said. Live Events With these two trade deals, "India will have an open market with the European Union, with the United States. These are the two largest markets. For any future investor, that makes India a very attractive location because effectively, the friction that is there on the border will melt away, and that is going to be an absolute game changer," Panagariya said. In response to a question by PTI on the India-US trade deal and tariffs, Panagariya said that "as far India is concerned, potentially, I see a lot of good might come out of it, because when the agreement has to be signed with the United States, India will also be lowering its tariffs." "This is a tremendous opportunity for India, and it is very seriously negotiating the agreement with the United States. So I'm sort of hoping to hear the good news," he said. "The most important thing is that this will result in a lot of liberalisation by India itself, and that, I think, is a very large part of the story. Of course, better access to the US market relative to its other competitors is a big plus also," Panagariya said. Panagariya, an eminent Columbia University professor and former Vice Chairman of NITI Aayog , also noted that from President Donald Trump to Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent have voiced optimism that an India-US trade agreement is almost imminent. Trump has stated on various occasions that the trade deal with India will happen soon, commenting as recently as last week that "We're very close to a deal with India, where they open it up." Trump has set 1 August as the deadline for several countries, including India, to sign a trade deal or face steep tariffs. Last month, Lutnick had said that one should expect a trade deal between India and the US in the not-too-distant future and that he is "very optimistic." The US' total goods trade with India is estimated at USD 129.2 billion in 2024. US goods exports to India in 2024 were USD 41.8 billion, up 3.4 per cent (USD 1.4 billion) from 2023. US goods imports from India totalled USD 87.4 billion in 2024, up 4.5 per cent (USD 3.7 billion) from 2023. The US goods trade deficit with India was USD 45.7 billion in 2024. Prime Minister Narendra Modi and President Trump have set a new goal for bilateral trade, 'Mission 500', aiming to more than double total bilateral trade to USD 500 billion by 2030. Negotiations between India and the US are underway to iron out pending issues for the trade deal. Commerce Minister Piyush Goyal reportedly said in London that Delhi is making "fantastic progress" in trade talks with Washington. Prime Minister Modi has also said that India is working on finalising a "mutually beneficial" trade agreement with the EU by the end of this year. Panagariya also elaborated on the 'Viksit Bharat' vision for India that envisages the country as a developed economy by 2047. He noted that in real dollar terms, India's GDP during 2003-2017 grew at 10 per cent and at about 7.8 per cent annually up till 2024. "If we can continue to do even what we have done actually over the last about 20 plus years, starting in 2003, we can get there", being able to grow at about 7.8 per cent. And there are reasons actually that we can on the whole probably do even better in the next 23-24 years," he said. India's current per-capita GNI (Gross National Income) in 2024-25 is USD 2,740, while the World Bank threshold per-capita GNI to achieve high-income country status is USD 13,995. The annual compound growth in constant dollars in per-capita GNI required to cross the World Bank threshold from this level is 7.3 per cent. With the population growth rate of 0.6 per cent, this per-capita GNI growth requires a GNI growth rate of 7.9 per cent, he said. India, the fifth largest economy in the world, has a GDP of USD 3.91 trillion in 2024-25, behind the fourth largest economy, Japan, which has a GDP of 4.19 trillion and Germany, the third largest with a GDP of USD 4.66 trillion. With India's growth in current dollars at 8-10 per cent, Panagariya said it is almost certain that India will surpass the GDPs of both Japan and Germany within three years and therefore, by the end of 2027, will become the third largest economy. Highlighting factors that put India in a favourable position to achieve the 2047 goal, Panagariya pointed to the very large gap between India's per-capita GDP (USD 2,780) as compared to South Korea (USD 33,120), Singapore (USD 84,730), the US (USD 82,770) and Germany (USD 53,340). This gap indicates that there is a large scope for catch-up for India, he said. In addition to this, India's large population will lead to scale economies in the provision of public goods, especially digital infrastructure and its young population will lead to a high worker/population ratio and high savings rate. Other key factors include a great momentum in both physical and digital infrastructure development, with road, railway and civil aviation infrastructure being built at breakneck speed and India's digital public infrastructure digitising public and private transactions faster than in most countries, he said. Noting the considerable scope for economic reforms, Panagariya referred to the implementation of new labour codes and much greater awareness among the states of the importance of urbanisation. On the challenges in the journey ahead, Panagariya emphasised that the transition out of the rural agricultural economy into industrial and services is the biggest challenge for India. "Therefore, the creation of well-paid jobs in industry and services is the biggest challenge," he said. PTI
Time of India
23-07-2025
- Business
- Time of India
India-US economic ties hit tariff roadblock? Panagariya, Ex- NITI Aayog VC sheds light on trade deal
India and Emerging Asia Economics at the Center for Strategic and International Studies (CSIS) for a public event featuring Dr. Arvind Panagariya, Chairman of the 16th Finance Commission of India, on July 23, 2025, at 11:00 am ET. As India continues its rapid economic ascent, its evolving relationship with the United States holds new opportunities and strategic significance. Dr. Panagariya will explore India's economic trajectory and its implications for bilateral cooperation, with a special focus on the expanding role of Indian states and cities as engines of growth. Dr. Panagariya brings deep expertise to this conversation, having served as Vice Chairman of NITI Aayog and India's G20 Sherpa. A renowned economist, academic, and author, he has held senior positions at the Asian Development Bank, the University of Maryland, and global institutions such as the World Bank and IMF. He is a recipient of India's prestigious Padma Bhushan award and the author of influential works including 'India: The Emerging Giant' and 'Why Growth Matters.' Show more Show less
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Business Standard
23-07-2025
- Business
- Business Standard
Finance Commission must focus on strengthening local bodies: Raghuram Rajan
Former Reserve Bank of India Governor Raghuram Rajan on Wednesday said the 16th Finance Commission should focus on handing over more funds to local bodies, including municipalities and panchayats, to empower them to address issues affecting the people more effectively. Speaking to news agency PTI, Rajan noted that the previous finance commissions devolved more funds to the local bodies. He said, 'Now we need to focus also on devolving funds from states to municipalities to panchayats, etc. That third level of devolution is what we need far more of.' The Finance Commission, established under the Indian Constitution, plays an important role in improving the financial health of municipalities. The commission evaluates the fiscal condition of municipalities and advises state governments on various aspects of fiscal decentralisation. Highlighting the contrast with other major economies, Rajan noted that local government employees in India are significantly lower than in countries like China and the United States. Rajan also called for the need to decentralise in a large country like India, noting that the country is overly governed from the Centre and state capitals. He added, 'I think the 16th Finance Commission should focus on making that happen through carrots and potentially sticks.' Panagariya urges local resource boost It's noteworthy that in November last year, 16th Finance Commission Chairman Arvind Panagariya asked the local rural and urban bodies to focus on raising their resources, stating that such a move will mobilise the citizens in terms of their expectations and demands from the local bodies. Recently, Panagariya also pointed out that most states have urged the Union government to raise their share of the tax pool to 50 per cent. According to a PTI report, states currently receive 41 per cent of the divisible tax revenue, while the Centre retains the remaining 59 per cent. Rajan's views on PLI scheme While speaking to PTI, the former governor also shared his assessment of the government's Production Linked Incentive scheme and added, 'I do not think we have any strong public data to evaluate the PLI scheme.' With all government programmes, he said, there has been some success as the country is now exporting more cell phones. However, he questioned, 'But has it (PLI scheme) done enough to move the needle on jobs in a big way? I think at job numbers you see in the periodic labour force surveys (PLFS) suggest not yet.' In 2021, the Central government introduced PLI schemes for 14 crucial sectors, including telecom, electronics, pharma, textiles, and auto. The scheme, launched with a total allocation of ₹1.97 trillion, aims to boost domestic manufacturing and enhance export competitiveness. Rare earth curbs Commenting on the rare earth export curbs from China to India and other countries, Rajan stated, 'We need a strategic view of different industries and ask where we can be held up by bottlenecks, and where it is relatively easy for us to undertake production to elevate those bottlenecks.' Commenting on the semiconductor sector, Rajan said that while some sort of 'antagonistic' power could restrict India's chip access, building a complete chip-making ecosystem domestically would be prohibitively expensive.
The Hindu
18-06-2025
- Business
- The Hindu
A fair share: on divisible pool of tax collections
The Sixteenth Finance Commission (SFC), whose recommendations on financial devolution will be valid from April 1, 2026, faces a piquant situation. Its chairman Arvind Panagariya had noted last week that 22 out of 28 States, including many ruled by the Bharatiya Janata Party (BJP), had asked for a larger share of the divisible pool of tax collections, from 41% to 50% — a legitimate demand. The Union government has effectively shrunk the divisible pool by disproportionately increasing its revenue through non-shareable cesses and surcharges, whose share of the Centre's gross tax revenue soared from 12.8% between 2015-16 to 2019-20 (pre-pandemic years) to 18.5% between 2020-21 and 2023-24 (Budget expenditure). Thus, the effective share of States in the Centre's gross tax revenues averaged close to 31% in the 2020-21 to 2023-24 period — it was 35% in the previous corresponding period. Compounding this is the post-GST reality, where limited avenues for States to raise their revenue, make them critically dependent on central transfers. While GST collections have been fairly good in recent years, this has still not addressed the issue of the reduced avenues for States to increase their revenue. Further, the existing formula for horizontal devolution, with a heavy weightage given to population and income distance, is seen by economically progressive States (the South), as a penalty for performance and responsible governance. Keeping the status quo would go against the grain and the idea of cooperative federalism that the BJP-led government has emphasised. Mr. Panagariya also remarked that a sudden nine-point jump to 50% would '[upset] too many carts', indicating that the Centre would be loath to lessen its share because of rising expenditure on defence and other capital-intensive projects. This means that the Finance Commission would be less inclined to engage with States' demands, also explaining why it might keep the devolution share unchanged at 41%. Yet, doing so would be a missed opportunity to forge a new federal compact. A modest increase in the vertical devolution, meeting States' demands half-way, would be a welcome signal. The Finance Commission must also recommend a mechanism that will rein in the arbitrary use of cesses and surcharges, maybe even capping them at a fixed percentage of the gross tax revenue of the Centre and including any surplus collection in the divisible pool, as some have suggested. It must fine-tune the horizontal distribution criteria to create a more equitable balance between a State's needs, its area, and its performance. Crafting a formula that is fiscally prudent and one that strengthens the federal structure at its roots, the States, is imperative.
