PM Modi revives Economic Advisory Council with Bibek Debroy as chief

NITI Aayog member Bibek Debroy will be to Prime Minister Narendra Modi what C Rangarajan was to former prime minister Manmohan Singh. 

While the country waited for steps to boost economic growth, the government on Monday announced setting up an Economic Advisory Council to the Prime Minister (EAC-PM), headed by Debroy. Also, even as the Bharatiya Janata Party’s (BJP’s) national executive meeting was silent on any stimulus package, the PM announced a Rs 16,320-crore electrification plan for all households by end-2018 at another event. 

The EAC to the PM is making a comeback after over three years, though with a tweak in the name. In its earlier avatar, it was known as the PM’s Economic Advisory Council, or PMEAC. The Modi government decided to set up the panel to propel the economy, as various parameters are showing signs of weakness amid a resource crunch. 

The council will analyse any issue, economic or otherwise, referred to it by the PM, according to its terms of reference. The body, which is an independent council, can also take up the issues suo motu. 

It will also address issues of macro-economic importance and present its views to the PM. 

EAC-PM will have three economists as part-time members — Surjit Bhalla, Rathin Roy, and Ashima Goyal. 

Former finance secretary Ratan Watal has been appointed member-secretary of the council. He’s currently principal advisor to the NITI Aayog. Both Debroy and Watal will remain in their position in NITI Aayog, sources said.
 

When contacted, Roy told Business Standard: “I have just been informed by the Prime Minister’s Office. I am right now in New York on an assignment to United Nations. I look forward to serving in the new role.” Bhalla tweeted, “Thanks to all for support (including the critics!) hope to provide inputs to help Indian economy and working with EAC and @bibekdebroy.”

The council has been set up at a time when economic growth declined to 5.7 per cent during the first quarter of 2017-18, the lowest in the past three years. The country’s current account deficit has soared to a four-year high of 2.4 per cent of gross domestic product in the first quarter of 2017-18 from 0.6 per cent in the previous quarter, and 0.1 per cent in April-June 2016.

The government is looking for options to spur the economy and create jobs as it faces a resource crunch since the Centre’s fiscal deficit has already touched 92 per cent of the Budget Estimates for FY18. 

As such, Debroy and his team may now provide innovative ideas to Modi to reshape the economy. The Manmohan Singh government relied on Rangarajan for vital assessment of the economy as his views were sought on almost every crucial issue facing the economy, be it the food security Bill, the gas pricing formula or sugar pricing. It is yet to be seen how crucial a role Debroy will play as advisor to Modi. Debroy has been instrumental in bringing transformational change in the Indian Railways during his stint as member of the NITI Aayog. It was based on the Debroy Committee’s recommendations that the government abolished the British-era legacy of a separate Railway Budget and merged it with the General Budget and embarked on changing the fiscal year from April-March to January-December.

The Debroy committee recommended liberalisation of the railways to attract private sector participation for project execution and setting up an independent regulator to promote competition. Debroy has also been a long-time proponent of pruning departments in large states to 30 to enable better coordination, governance and efficiency.

Educated at Presidency College (Calcutta), Delhi School of Economics and Trinity College (Cambridge), Debroy began his career as a teacher at his alma mater, Presidency College, and worked later at Gokhale Institute of Politics and Economics (Pune), Indian Institute of Foreign Trade (Delhi), and National Council of Applied Economic Research (Delhi). He has served as a consultant to the department of economic affairs in the finance ministry.

(With inputs from Sanjeeb Mukherjee)