Dr. Arvind Panagariya, Chairman of the 16th Finance Commission of India and former Vice Chairman of NITI Aayog, recently supported the privatization of public sector banks in India. He expressed this view during the Business Today Banking & Economy Summit, stating that once the current government returns to office after the general elections, privatization should be on their agenda.
Dr. Panagariya highlighted that the public sector banks in India have overcome their previous challenges of high levels of non-performing assets (NPAs) through government funding and are now in good health. He believes that this is an opportune time to privatize these banks, as they are performing well and have healthy asset books.
According to Dr. Panagariya, the privatization process would be gradual and not all banks would be privatized at once. He emphasized the need for commercial pressure to make the banking sector more efficient, similar to other industries. He suggested that as the privatization progresses, the performance of the privatized banks can be compared to those that remain under government ownership, and decisions can be made accordingly.
Dr. Panagariya acknowledged that while the previous crisis of NPAs has been resolved, the nature of finance is unpredictable, and there is a possibility of future challenges. He believes that privatization is necessary to ensure the efficiency and stability of the banking sector.
It is important to note that Dr. Arvind Panagariya is an Indian-American economist who served as the first Vice Chairman of NITI Aayog from January 2015 to August 2017. He is currently a professor of economics and the Jagdish Bhagwati Professor of Indian Political Economy at Columbia University.
