‘Don’t deviate from fiscal consolidation’
NEWDELHI:Admitting a slowdown in the Indian economy, the newlyconstituted Economic Advisory Council (EAC) on Wednesday said the fiscal deficit target should not be breached.
The EAC led by economist Bibek Debroy will advise prime minister Narendra Modi directly on the economy. The body met for the first time since it was constituted in September.
“The fiscal consolidation exercise should not be deviated from,” said Debroy, who is also a member of the federal think tank NITI Aayog. His stance as the EAC chief, however, contradicts NITI Aayog vice chairman Rajiv Kumar, who said last Wednesday the economy will do well with extra fiscal stimulus and there will be no harm if the centre busts the fiscal deficit target.
“The consensus (in the EAC) is there is a slowdown. We will examine the causes which could be multiple,” council member Surjit Bhalla said.
“Acceleration of economic growth” is one of the focus areas for the EAC, he added.
Debroy said the EAC has identified 10 focus areas to work on.
These include economic growth, employment and job creation, informal sector and its integration and the fiscal framework and monetary policy. The EAC will also look at public expenditure, institutions of economic governance, agriculture, consumption and production patterns as well as the social sector.
Members will prepare reports on the focus areas and discuss them in a “formal meeting” in November, the economist chairman of the council said.
“The entire thrust of everything we do will be on implementable recommendations,” Debroy said. He stressed that while the EAC would work in coordination with all ministries including the finance ministry, its recommendations would be given only to the Prime Minister.
The NITI Aayog is already engaged in an elaborate exercise of consulting stakeholders and the private sector to create jobs.
The Modi government has been under attack from both the opposition and other organisations allied to its own ideological parent, the Rashtriya Swayamsewak Sangh over economic management and “jobless growth.”