The Economic Advisory Council to the Prime Minister (EAC-PM) in its first meeting Wednesday stressed on the need to “accelerate economic growth and employment over the next six months” and identified 10 areas on which it will prepare reports and make recommendations to the government over the next few months.
The Council also recognised the need for instituting an Economy Track Monitor, using lead indicators and triggers for action, based on informed assessment and analysis.
“There is a consensus among us about the various reasons that have caused the slowdown” and the Council will provide specific recommendations that can be implemented in the near term, its chairman Bibek Debroy said after the meeting.
There is a lot of concern about the economy today and the Council will “work as a sounding board of ideas”, EAC member Ashima Goyal said.
The EAC identified ten themes on which reports will be prepared: economic growth; employment and job creation; informal sector and integration; fiscal framework; monetary policy; public expenditure; institutions of economic governance; agriculture & animal husbandry; and, patterns of consumption & production and social sector.
The other members on the committee include Surjit Bhalla and Rathin Roy, along with Ratan Watal, principal advisor, Niti Aayog, as member secretary.
Debroy said the Council will work in consultation with various stakeholders, including sectoral ministries, states, experts, institutions, regulators and the private sector.
Chief Economic Advisor Arvind Subramanian made a presenstation to the Council and focused attention on accelerating economic growth, including investments and exports-using a combination of different policy levers. EAC member Rathin Roy said that “the consensus is there is economic slowdown, we will examine its causes”.
Asked whether Prime Minister Narendra Modi has referred any specific issues out of these ten to the Council to advise on, Debroy said: “There are issues which the Prime Minister has already referred to us but we will not tell you what those issues are.” While constituting the EAC last month, the government said the Council can up issues “either suo-motu or on reference from the Prime Minister or anyone else”.
To a query on job losses in the economy post demonetisation and implementation of the Goods and Services Tax (GST), Debroy said this “issue was not examined in today’s meeting.” He also alluded to the lack of adequate employment data to make any conclusive assessment of the job scenario in the country. “Whether we like it or not, we don’t have good data on employment and jobs,” he said.
The constitution of the EAC-PM came in the backdrop of growing concerns over the pace of growth in the economy and the slow pace of job creation. In the quarter April to June 2017, the GDP growth fell to 5.7 per cent from 7.9 per cent in the corresponding period last year. The reduction in growth came despite the government stepping up expenditure in the initial months.
The Council wants the government to stick to its fiscal consolidation road map and has suggested that stimulus to the industry should not be at the cost of fiscal prudence. When asked whether the government can breach fiscal deficit to provide stimulus to the industry, Debroy said, “There is a consensus (among the members)… that the fiscal consolidation exercise should not be deviated.” The government pegged the fiscal deficit target at 3.2 per cent for the current fiscal and 3 per cent for the next financial year.
“The deliberations of the new EAC-PM also reflect its value addition as an independent institutional mechanism, to provide informed advice to the Prime Minister on addressing issues of macroeconomic importance and related aspects…The Council views its role as also being a catalyst for action, by both developing and enabling action recommendations through different stakeholders,” the Council said in a press statement.
The Council will have another formal meeting in November. “Today, it was the first formal meeting. We will also have smaller meetings with stakeholders…We will also have another formal meeting next month and give recommendations to the prime minister,” Debroy said.
In 2014, the NDA government had disbanded the PMEAC which was earlier headed by former Reserve Bank of India governor C Rangarajan. The Economic Advisory Council to the Prime Minister was first constituted by the then prime minister Manmohan Singh on December 29, 2004, under the chairmanship of C Rangarajan. The work of the council included offering advice to the Prime Minister on policy matters from time to time. Besides, it also prepared a monthly report on economic developments at home and abroad for the Prime Minister.