Amid concerns of an economic slowdown, Prime Minister Narendra Modi has revived the defunct Economic Advisory Council under the chairmanship of eminent economist, Dr Bibek Debroy.
Addressing the leaders and legislators of the ruling Bharatiya Janata Party Prime Minister Narendra Modi asked them to look beyond the election and see democracy as an instrument of mass participation. Modi was addressing the National Executive meeting attended by 13 chief ministers, six deputy chief ministers, 60 central ministers, 1,115 MLAs and MLCs and 334 members of Parliament. In his address, Modi focussed more on corruption-free India, politics and organisational issues. He steered clear of saying much on the economic front.
An hour later, the Government announced the formation of the Economic Advisory Council to the Prime Minister (EAC-PM), headed by NITI Aayog member and eminent economist Dr Bibek Debroy, to advise him.
This is proof enough of the concern over the state of the economy.
Who’s who of EAC
In addition to Dr Debroy, the EAC will have five members. Dr Debroy: Since its conception in January 2015, Debroy has been a member of NITI Aayog, the think tank of the Indian Government. As the head of the panel of restructuring railways, Debroy brought out a final report seeking to appoint an independent regulator while doing away with the Rail Budget altogether.
EAC-PM will have three economists as part-time members — Surjit Bhalla, Rathin Roy and Ashima Goyal.
Dr Surjit Bhalla: He is the chairman and MD of Oxus Investments, a New Delhi-based economic research, asset management, and emerging-markets advisory firm.
Rathin Roy: He is currently the director of the National Institute of Public Finance and Policy, New Delhi.
Ashima Goyal: She is a professor at the Mumbai-based Indira Gandhi Institute of Development Research.
Ratan Watal: He is the former finance secretary and principal advisor, NITI Aayog. He will be the Member Secretary to the EAC-PM.
According to a release issued by the prime minister’s office, the terms of reference of the EAC would be to “analyse any issue, economic or otherwise, referred to it by the prime minister and advising him thereon.”
It will also “address issues of macroeconomic importance,” and present its views to the prime minister, it said, adding that “this could be either suo-motu or on reference from the prime minister or anyone else.”
Its terms of reference also include attending to “any other task as may be desired by the prime minister from time to time,” the statement said.
However, this is not the first time that the Indian government has established the economic advisory council. In fact, the Prime Minister’s Economic Advisory Council (PMEAC) has been constituted several times since Independence.
PMEAC was constituted on December 29, 2004, headed by Suresh Tendulkar, who resigned upon the completion of the then Union Government's term on 21 May 2009.
He was succeeded by Chakravarthi Rangarajan, who resigned following the defeat of the Congress-led UPA in the general elections 2014.
Since the Modi government was inaugurated in May 2014 the PMEAC had remained defunct.
India’s economic growth has decelerated to 5.7 pc, the slowest pace in three years, in the quarter ended June. Also, the Index of Industrial Production grew by a mere 1.7 pc; manufacturing IIP grew by 1.3 pc, while exports witnessed a massive fall of 37 pc when compared to the USD 314.4 billion for India in 2013–2014.
India could manage only USD 196.6 billion in exports in 2015–2016. Recently, the United Nations Conference on Trade and Development in a report warned that the Indian economy faces “serious downside risks” as the government’s demonetisation drive, implementation of the goods and services tax (GST) and corporate debt reduction efforts could accelerate a slowdown and make recovery difficult.
Significantly, the revival of EAC comes close on the heels of the induction of Rajiv Kumar, former economic adviser to the finance ministry, as the chairman of NITI Aayog. Last week, it extended the tenure of Arvind Subramanian, known for his out-of-the-box ideas, as the chief economic adviser by a year.
Interestingly stories of a possible economic stimulus package to revive the Indian economy appeared in the Indian media last week. In fact, Union Finance Minister Arun Jaitley had hinted that the government will announce measures to revive the economy. He told the media that measures will be announced after consultations with the Prime Minister. But what came instead was the revival of an advisory council to advise Prime Minister Modi on economic matters. Perhaps, sane advice itself could be a good stimulant.