Former Niti Aayog vice chairman Arvind Panagariya has advocated for the creation of an independent privatisation ministry to accelerate the government's disinvestment programme. According to reports from The Economic Times, Panagariya stated that "I firmly believe that, regardless of fiscal pressures, the privatisation of PSUs and most public sector banks is integral to our economic reforms." He emphasized that modernisation of the economy as part of India@2047 movement requires resuscitating PSU and PSB privatisation, arguing that aggressive privatisation should continue irrespective of the West Asia crisis and broader geopolitical uncertainties. As reported by The Economic Times, Panagariya noted that the Department of Disinvestment has been unable to maintain the pace of privatisation, making an independent ministry necessary to revive the programme. Under Panagariya's leadership at Niti Aayog, the government think tank had pursued the idea of disinvestment of PSUs, with Niti Aayog's privatisation program launched in 2016.
Addressing concerns over capital outflows despite India's relatively strong growth rates, Panagariya highlighted that gross foreign direct investment (FDI) inflows continue to reflect investor confidence in the Indian economy. As reported by The Economic Times and The Times of India, gross FDI rose from $71.3 billion in FY24 to $80.6 billion in FY25 and further to $94.5 billion in FY26. According to the latest RBI data, net FDI inflows stood at $7.7 billion in 2025-26, a sharp rise from $1 billion in 2024-25, though they remained below $10.2 billion in 2023-24 and substantially lower than $28 billion in 2022-23. Panagariya explained that a significant portion of gross FDI comes through private equity investments, which naturally see exits when companies go public, with IPO activity in India accelerating over the past two years leading to more-than-usual exits by private-equity investors. As reported by The Economic Times, Panagariya noted that foreign investors continue to see the long-run productivity of investments in India very positively, with investors withdrawing a portion of past gross FDI in any given year.
On the rupee, Panagariya said it would be reasonable to conclude that the currency is no longer significantly overvalued after recent depreciation. According to The Economic Times, he noted that "I think we have now turned a corner by letting rupee depreciation accelerate." Regarding exports, Panagariya cited the impact of an overvalued rupee on India's merchandise exports, which fell from $310 billion in 2011-12 to $260 billion in 2015-16 and recovered to $320 billion in 2019-20. He also reiterated his hope that the RBI "will not fall into the psychological trap of refusing to let the rupee cross the Rs 100-per-dollar mark for too long." The rupee has become one of the worst-performing emerging market currencies this year, pressured by expensive oil, capital outflows, widening trade deficits and a surging US dollar. As reported by The Economic Times, Panagariya said the fact that the rupee was at approximately 48 per dollar in 2002-03 and 47 per dollar nine years later in 2011-12 left it massively overvalued in real terms, with the correction being slow initially despite significant nominal depreciation.
Regarding concerns over below-average monsoon forecasts and inflation, Panagariya said India's dependence on rainfall has declined over time. As reported by The Economic Times and The Times of India, he noted that "Our water reservoirs are in good shape, and, based on the increase in the area sown over last year, farmers seem to have taken a generally optimistic view of the situation. Our buffer stock is also robust." Panagariya added that "I do not see a compelling reason to be concerned on this account," citing the country's improved water management capabilities and reduced reliance on monsoon rains over the years. He emphasized that over the years, India's reliance on rain has seen a steady decline, providing greater resilience against weather-related disruptions.
Panagariya attributed foreign portfolio investment (FPI) outflows to capital leaving the country over the last two years, with Indian equities becoming overvalued accelerating investor exits. According to The Economic Times, he expects this source of outflows to calm down in FY27, noting that "By all accounts, Indian equities had become overvalued, which accelerated the exit. But now a valuation correction has happened." He also pointed to rising overseas investments by Indian companies, stating that "If this is a short-term phenomenon, we have nothing to worry about regarding outflows. If it is a long-term trend, it is an excellent development. For it indicates that Indian firms are reaching a high degree of maturity as they are spreading their wings abroad." Foreign portfolio investment (FPI) flows remained volatile during the year, with net outflows of $16.5 billion in 2025-26, driven mainly by the equity segment. The eminent economist noted that in the last two years, FDI by Indian firms abroad have also accelerated, which has resulted in some outflow of capital from the country, though he considers this an excellent development indicating Indian firms are reaching maturity.
