Economic council revival a worthy step

Prime Minister Narendra Modi has done now what he should have done soon after assuming office – set up his own economic advisory council (EAC) as a replacement for his predecessor Dr Manmohan Singh’s council. He was quick to disband the council headed by former Reserve Bank Governor C. Rangarajan but took three and a half years to realise that he needed to revive the institution. Finance Minister Arun Jaitley is indeed a brilliant lawyer but his skills in finance were essentially untested. To have given him Finance and loaded him with another challenging portfolio – Defence – for a substantial part of his term imposed on him too heavy a burden. Jaitley should welcome the revival of the prime minister’s economic advisory panel and lend full support to it. It is to be hoped that there would be no ego clash between the council and the Finance Minister and no major disagreements on policy formulation. How the chairman of the new council, Bibek Debroy, would be in his new avatar will get known in due course but a generalist like Modi who is quick on the uptake certainly requires an advisory council to advise him on crucial economic matters. With the budget date having been advanced, Jaitley would indeed have his hands full.

Bibek, who is a Niti Aayog member, will be assisted on the panel by former Finance Secretary Ratan Watal who will be its member-secretary. Economist Surjit Bhalla, National Institute of Public Finance and Policy director Rathin Roy and Indira Gandhi Institute of Development Research professor Ashima Goyal have also been roped in as members of the council. Together, they would be a fairly formidable team. The key term of reference of the panel is to address issues of macroeconomic importance for the prime minister. Another term of reference is analysis of any issue, economic or otherwise, referred to it by the Prime Minister and to advise him on the same, and attending to any task ‘as may be desired’ by the PM from time to time. The formation of the Council at this time suggests it could play a critical role in reviving the economy’s growth momentum that has slumped over the past few quarters, with the first quarter of this financial year clocking just 5.7 per cent growth, down from 7.9 per cent a year ago. With the economy not in the best of shapes, this is indeed going to be a huge challenge.