An Indian-born economics professor at New York’s Columbia University has been appointed to head Prime Minister Narendra Modi’s new economic planning body with the remit of mounting a Margaret Thatcher-like attack on India’s Soviet-style economic strategy.

Arvind Panagariya is renowned for his market-friendly, pro-growth economics and is expected to be named to Mr Modi’s new Policy Commission which aims to modernize India’s cumbersome form of central planning. 

A top government source told Reuters on Monday that the appointment of Panagariya is likely to be announced in the next 24 hours.

Whilst Panagariya’s economics are skewed towards free market doctrines, he has insisted that India needs to strike a balance between creating more space for markets whilst expanding social spending given the country is home to a third of the world’s poorest people.

He told Reuters: "Policies of Reagan and Thatcher sought to shrink the role of the state and expand that of the market in what were already market economies.  Here, in India, we are trying to give back markets the space that belonged to them in the first place and was usurped by overactive regulations."

"In effect, we are trying to move from far left of the centre towards the centre," he added.

"The reforms are intended to expand social spending of the government as also to make this spending effective."

Panagariya has previously called for the government to not focus too much on reducing the fiscal deficit as it would stifle growth and focus instead on more capital spending.

That view is shared by Arvind Subramanian, another eminent economist brought in from the United States last year to advise the finance ministry.

In a December economic report Subramanian advocated higher infrastructure spending by the government to kick-start stagnant private investment.

Their views could be influential as Finance Minister Arun Jaitley prepares his first full budget, to be presented in parliament in February.

Modi scrapped the 65-year-old Soviet-era Planning Commission in the New Year, replacing it with a body he said would do more to involve regional governments.

The 64-year-old premier will formally chair the new National Institution for Transforming India (NITI), which is designed to function as both a think tank and a policy forum.

Panagariya, as vice chairman, would have a pivotal role in coordinating economic strategy and hold cabinet rank.

NITI's permanent staff would all answer to Modi, while India's 29 states and seven union territories would also be represented.