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Vijaya Pushkarna
Vijaya Pushkarna

ECONOMIC POLICY

EACPM draws 'roadmap for accelerated economic growth'

Bibek-15-eacpm Chairman, Economic Advisory Council to the Prime Minister, Dr Bibek Debroy addressing media after the first formal meeting of the newly constituted council | Sanjay Ahlawat

The Economic Advisory Council to the Prime Minister (EACPM) chaired by Dr Bibek Debroy, in its first formal meeting on Oct 11, came to a consensus that the Indian economy is facing a slowdown.

The EACPM, which includes Member Secretary Ratan P. Watal, Dr Surjit Bhalla, Dr Rathin Roy and Dr Ashima Goyal, identified the various reasons that have contributed to the slowdown. Dr Debroy, however, refused to share the reasons the council have identified.

The chairman of EACPM made it amply clear that the council was only meant to advise the PM and the recommendations made by the council were not supposed to be announced.

The meeting identified ten themes around which the council would work over the next few months. These include the very controversial economic growth and job creation departments. Others are informal sector integration, fiscal framework, monetary policy, public expenditure, institutions of economic governance, agriculture and animal husbandry, patterns of consumption and production, and the social sector.

While the EACPM's recommendations to the PM will remain confidential, Dr Debroy did say that the council made a unanimous recommendation that the government should not deviate from fiscal consolidation.

In the first official briefing of the council, Dr Debroy remained steadfast about not giving away too much of information, and yet gave a peek into the major recommendations.

The five members will share among themselves the ten issues they have zeroed in on, and each member is expected to share a paper on the theme. This is initial work, he said, explaining that doability would be a major factor when the recommendations are made. “That is what distinguishes the EACPM from other bodies” said Dr Debroy.

Apparently, Prime Minister Narendra Modi has already consulted the council a few times. “There are issues which the prime minister has already referred to us. We will not tell you what the issues are. And it stands to reason that we have responded to that. We don't have to wait for a formal meeting for this. Also, if our next formal meeting is a month away, it does not mean we'll have nothing to work on during the month”, Dr Debroy said, indicating that the prime minister indeed wants advice at a time when a whole lot of issues are threatening to rock his boat, and the next Lok Sabha elections less than two years away.

Dr Debroy, a member of the NITI Aayog whose previous vice chairman Dr Arvind Panagariya had maintained there was no unemployment but only underemployment, said in response to a question that the council had not discussed the issue of job creation. “We don't have good data on jobs, and we cannot get it in a country like India. The only satisfactory way to get it is the household survey; the last one was held in 2012. The next one will take many years, so what do we do? We'll tell you next month.”

On whether the council will look at specific schemes and projects of the government, Dr Debroy replied that, “Public expenditure includes all the government schemes.”

Asked about a possible clash with the RBI's Monetary Policy Committee, since the council has identified monetary policy as one of the ten issues, Dr Debroy said there was no question of turf. “It is about collaboration. We'll take onboard the views of the RBI, the MPC. We may have another view that compliments and supplements their view. Multipolicy is a policy instrument available to us. We'll look at it not as a percentage, but from a structural point of view.” There was talk of synergy, team work and doability.

The recommendations of the EACPM will be formulated in consultation with ministers and ministries, but the recommendations will be for the prime minister.

Dr Surjit Bhalla, in an interjection, referred to the fact that the first meeting of the council had drawn the “road map for acceleration of economic growth.” This presumes that economic growth is already high, he observed.

Chief Economic Advisor Dr Arvind Subramanian, in a presentation to the council, focused on accelerating economic growth, including investments and exports, using a combination of different policy levers.

The council also recognised the need for effective tracking of key economic parameters through possible mechanisms. The council also suggested to institute an economy track monitor, using lead indicators and trigger action, based on informed assessment and analysis.

The press briefing was also used to assert that it was an independent institution meant to add value and provide informed advice to the PM on issues of macroeconomic importance and related aspects. In a brief press release, the council said it is focusing on critical interventions related to accelerating economic growth and employment over the next few months, with greater social and financial inclusion, based on rigorous economic analysis. “The council views its role as also being a catalyst for action, by both developing and enabling action recommendations through different stakeholders.”

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