Prime Minister Narendra Modi's five-member Economic Advisory Council on Wednesday identified priorities to accelerate economic growth and job creation over the next six months, amid international financial institutions such the World Bank and the International Monetary Fund lowering India's growth projections. India's growth fell to its slowest pace in three years in the three months to June.
The panel would study the issues through consultative processes involving sectoral ministries, states, experts, institutions, private sector and other key stakeholders and prepare a comprehensive report and recommendations to be sent to the PM.
At its first meeting, the Council reached a consensus on the reasons behind the slowdown in economic growth. However, Bibek Debroy, chairman of the panel, refused to publicly identify them. "There is a consensus among us about the various reasons for slowdown in the growth rate, but we will not identify the reasons," Debroy said at a press briefing. He added that the Council has begun a process of consulting stakeholders both in the government and outside to seek implementable policy inputs.
The meeting was attended by members, including leading economists Dr Surjit Bhalla, Dr Rathin Roy, Dr Ashima Goyal.
Member Secretary Mr Ratan P Watal, former Finance Secretary and Principal Adviser at NITI Aayog were also present and the Council took stock of the current economic, fiscal and monetary policy environment and identified key issues that it would focus on.
Chief Economic Advisor Dr Arvind Subramanian in his presentation focused on accelerating economic growth, including investments and exports, using a combination of different policy levers.
The 10 themes identified by the council are economic growth, employment and job creation, informal sector and integration, fiscal framework, monetary policy, public expenditure, institutions of economic governance, agriculture and animal husbandry, patterns of consumption & production and social sector.
"It was also agreed that specific-issue papers will also be brought out by members to address key concerns and linkages will be established with key national institutions," said Debroy.
Another key issue recognised was the need for effective tracking of key economic parameters, using lead indicators and triggers for action, based on informed assessment and analysis.
Debroy said the deliberations at the Council will reflect value addition as an independent institutional mechanism, to provide informed advice to the Prime Minister on addressing issues of macroeconomic importance and related aspects. He said the Council will be focused 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.
On whether, the Council will come at loggerheads with other financial bodies of the government, Debroy clarified that it would offer policy advice that would complement the views of other agencies. For instance, its advice on monetary policy would be in consultation with the RBI. "It is necessary to have a different view that complements the RBI view. We will be looking at structural issues in monetary policy and not the level at which the policy rate should be," Debroy clarified.
The members said that the Council will formulate and make recommendations upon various issues like monetary policy, fiscal framework, agricultural and social sector. The Council said that it will work in co-operation and consultation with existing bodies and will be using resources of Niti Aayog.
Taking a dig at the IMF which on Wednesday lowered India's growth forecast from 7.2 per cent to 6.7 per cent in the 2017-18 fiscal year, Council member Rathin Roy said that the world body falters in its projections in 80 per cent instances. He also refused to accept the World Bank projections either, saying it has also faltered in the past.
The Council has been set up three years after the NDA government assumed power. The formation of a team of senior economists and former bureaucrats come at a time when the economy has been growing at its slowest pace of 5.7 percent since May 2014. In addition, private investment has been tepid and manufacturing sector is witnessing a slowdown.
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