Economic Advisory Council Explained

Economic Advisory Council to the Prime Minister of India (PMEAC)^[1] is a non-constitutional, non-permanent and independent body constituted to give economic advice to the Government of India, specifically the Prime Minister.^[2] The council serves to highlight key economic issues facing the country to the government of India from a neutral viewpoint.^[3] It advises the Prime Minister on economic issues like inflation, microfinance, and industrial output.

History

The PMEAC has been constituted several times since the independence of India.

In the latest occurrence, Prime minister Modi revived the body on 25 September 2017. Currently PMEAC chairman post is held by Bibek Debroy.^[4]

The previous Prime Minister's Economic Advisory Council (PMEAC) Chairman Chakravarthi Rangarajan^[5] resigned on 19 May 2014. He sent his resignation to the Prime Minister Manmohan Singh.He resigned following the defeat of the Congress-led UPA in the general elections 2014.

Since the term of the PMEAC was parallel to that of the Prime Minister, with the resignation of the PM Manmohan Singh on 17 May 2014, the PMEAC also needed to resign.

The PMEAC headed by C Rangrajan had Saumitra Chaudhuri, V.S. Vyas, Pulin B. Nayak and Dilip M. Nachane as members.

Before this, PMEAC which was constituted on 29 December 2004, headed by Suresh Tendulkar resigned upon the completion of the then Union government's term on 21 May 2009.^[6]

Functions

Terms of reference as defined by the PMEAC are as follows:^[3]

1. Analyzing any issue, economic or otherwise, referred to it by the Prime Minister and advising him thereon;
2. Addressing issues of macroeconomic importance and presenting views thereon to the Prime Minister. This could be either suo-moto or on a reference from the Prime Minister or anyone else:
3. Submitting periodic reports to the Prime Minister on macroeconomic developments and issues with implications for economic policy;
4. Attending to any other task as may be desired by the Prime Minister from time to time.

The primary role of the PMEAC is to give a neutral viewpoint on economic policy matters that are referred to it by the Prime Minister.^[2] Additionally it prepares a monthly report of economic developments that need to be highlighted to the PM. For this purpose it closely monitors national and international economic developments and trends and develops appropriate policy responses for the PM.It publishes reports on the annual Economic Outlook^[7] and Review of the Economy of India.

Organisation

The PMEAC is chaired by a Chairperson and consists of eminent economists as members.^[3] It is supported in its functions by a team of officials and administrators. There is no fixed definition on the exact number of members and staff of the PMEAC. At one point it was even chaired by the then Prime Minister Atal Bihari Vajpayee himself.

For administrative, logistic, planning and budgeting purposes, the NITI Aayog serves as the Nodal Agency for the PMEAC.^[8]

Chairman

Bibek Debroy is the current chairman of the current EAC, appointed in 2017.^[9]

Dr. C. Rangarajan was the Chairman of the previous PMEAC. Chairman suggests measures to improve the economic condition.^[3] He was appointed in August 2009.^[10] The Chairman had the rank equivalent to a Cabinet Minister of India.^[2]

Members

The following are currently the members of the PMEAC:^{[3] [11] [12]}

• Bibek Debroy - chairman of the council, who was a member of NITI Aayog.
• Dr. Shamika Ravi, as a full time member who was also earlier member of the EAC.
  • Sanjeev Sanyal, as full-time member, who was Principal Economic Advisor of Finance Minister.
• Dr. Sajjid Z. Chinoy, as part-time member, who is Chief India Economist at J.P. Morgan
• Dr. Ashima Goyal, as part-time member, a widely published economist and Indira Gandhi Institute of Development Research professor
• Prof. TT Ram Mohan, as part-time member. Visiting Professor at IIM Ahmedabad.
• Neelkanth Mishra, as part-time member, is a Managing Director, Co-Head of Equity Strategy, Asia Pacific, and India Strategist for Credit Suisse
• Nilesh Shah is currently Managing Director of Kotak Mahindra Asset Management Company Limited
• Dr. Poonam Gupta, as part-time member. Director General of NCAER.

The previous EAC had, in addition to Dr C Rangarajan, the following members:^[13]

• Dr. M Govinda Rao (Director-General, National Institute of Public Finance & Policy)
• Dr. Saumitra Chaudhury (Economic Adviser, ICRA (Information and credit rating services), India)
• Dr. Vijay Shankar Vyas (President, Asian Society of Agricultural Economists)
• Dr. Dilip M. Nachane (Professor Emeritus, Indira Gandhi Institute of Development Research, Mumbai)
• Economist Surjit Bhalla
• National Institute of Public Finance and Policy director Dr. Rathin Roy
• Brookings Institution member Shamika Ravi

In the previous PMEAC, the members of the council were given the rank of Minister of State.^[2] At one time even the former Prime Minister Manmohan Singh was a member of the PMEAC^[14]

Officials

The previous EAC had the following officials:

• Dr. Alok Sheel - Secretary
• Tapasya Obhroi Nair - Deputy Secretary
• Sh. Vibeesh E M - Senior Research Officer

Impact

The periodic reports of the PMEAC - the annual Economic Outlook^[7] and Review of the Economy - are the most widely followed. Additionally the remarks and opinions of the Chairman and members of the PMEAC get widespread media coverage and are influential in formulation of the policies of other economic agencies, financial institutions and businesses.^[15] Many financial periodicals publish interviews and speeches of PMEAC Chairman^[16] to understand the most critical economic woes facing the country like inflation, monetary measures,^[17] etc. Views of the PMEAC are also sought after to better understand the prospects of economic performance of India like its growth rates^{[16] [18]} as well as on policy matters like autonomy of regulators^[19] and cotton export policy.^[20] In February 2011, PMEAC recommended to the government to initiate the process of fiscal consolidation given that the international financial crisis has started to ease and the government had to re-initiate its commitment to the Fiscal Responsibility and Budget Management Act.^[21]

Reports

Among the widely read periodic reports of the PMEAC - the annual Economic Outlook^[7] and Review of the Economy, the following are the latest editions.

1. Review of the Economy 2010-11^[22]
2. Economic Outlook for 2010-11^[23]
3. Review of the Economy 2009-10^[24]
4. Economic Outlook for 2009-10^[25]
5. Review of the Economy 2008-09^[26]
6. Economic Outlook 2008-09^[27]
7. Review of the Economy 2007-08^[28]
8. Economic Outlook for 2007-08^[29]
9. Economic Outlook 2006-07^[30]

Latest assessment 2010–11

Based on the latest assessment of the Economy of India for the financial year 2010–11, the EAC has highlighted the following:^[22]

• Economic growth projected at 8.6% for FY2010-11 and 9% for FY2011-12
• Inflation estimated to be at 7% by March-end
• Agriculture sector projected to grow 5.4% in 2010-11
• Industry sector to expand at 8.1% and services sector at 9.6%
• Fiscal deficit to come down to 5.2% in FY11
• Exports estimated to increase to $230 billion in FY2010-11
• Current account deficit to be 3% of GDP
• Budgeted fiscal and revenue deficit beyond comfort zone
• Capital inflows projected at $64.6 billion this fiscal
• Investment rate expected to be 37%
• Domestic savings rate expected to be 34%

See also

• Planning Commission
• National Statistical Commission
• Five-Year Plans of India

External links

• Economic Advisory Council to the Prime Minister Homepage

Notes and References

1. Web site: Economic Advisory Council Home Page . Eac.gov.in . 2011-03-07.
2. Web site: Prime Minister of India Official Website . Pmindia.nic.in . 2004-12-29 . 2011-03-07 . dead . https://web.archive.org/web/20110721172852/http://pmindia.nic.in/eacbody.htm . 2011-07-21 .
3. Web site: Economic Advisory Council to the Prime Minister of India. eac.gov.in. 7 March 2011.
4. Web site: PM Modi reconstitutes Economic Advisory Council to revive GDP growth . livemint.com . 2017-09-28 . 2017-10-07.
5. Web site: Economic Advisory Council reconstituted . Thaindian.com . 2009-08-11 . 2011-03-07.
6. News: PM's Economic Advisory Council members resign . https://web.archive.org/web/20121104205743/http://articles.timesofindia.indiatimes.com/2009-05-21/india/28162780_1_pmeac-resignation-letters-upa-government . dead . 2012-11-04 . 2009-05-21 . . 2011-03-07.
7. Web site: Economic Outlook 2010-2011 . Business.gov.in . 2011-03-07 . dead . https://web.archive.org/web/20110721155506/http://business.gov.in/news_analysis.php?bid=463 . 2011-07-21 .
8. Web site: Planning Commission of India . Planningcommission.nic.in .
9. News: PM forms Economic Advisory Council; Bibek Debroy appointed chairman. Team. BS Web. 2017-09-25. Business Standard India. 2019-12-06.
10. Web site: C. Rangarajan to head PMEAC again . vision.sughosh.in . 2014-06-26 . 2014-06-26 . https://web.archive.org/web/20160306015118/http://vision.sughosh.in/economic-advisory-council-pm/ . 6 March 2016 . dead .
11. Web site: PM - Economic Advisory Council - Part-time Members.
12. News: Govt expands PM's Economic Advisory Council; appoints 3 part-time members. Roychoudhury. Arup. 2019-10-17. Business Standard India. 2019-12-06.
13. Web site: Members who raised concerns about economy dropped from prime minister's advisory council. Scroll Staff. Scroll.in. en-US. 2019-12-06.
14. http://india.gov.in/govt/rajyasabhampbiodata.php?mpcode=2 ManMohan Singh's Profile
15. Web site: PMEAC news . Dnaindia.com . 2010-07-24 . 2011-03-07.
16. Web site: Interview with C.Rangrajan . Business-standard.com . 2010-10-22 . 2011-03-07.
17. News: RBI may go for tightening . Economictimes.indiatimes.com . 2011-02-14 . 2011-03-07.
18. News: Growth Rate of india TOI . The Times of India . 2010-01-02 . 2011-03-07.
19. News: PMEAC chairman backs regulators' autonomy . The Times of India . 2010-08-07.
20. Web site: Cotton Export Policy Business standard article . Business-standard.com . 2010-07-23 . 2011-03-07.
21. News: PMEAC asks govt to withdraw a few tax exemptions in Budget . Business Standard . 22 February 2011 . 22 February 2011.
22. Web site: Review of Economy 2010-11. PMEAC. 7 March 2011.
23. Web site: Economic Outlook for 2010-11. PMEAC. 7 March 2011.
24. Web site: Review of the Economy 2009-10. PMEAC. 7 March 2011.
25. Web site: Economic Outlook for 2009-10. PMEAC. 7 March 2011.
26. Web site: Review of the Economy 2008-09. PMEAC. 7 March 2011.
27. Web site: Economic Outlook 2008-09. 7 March 2011.
28. Web site: Review of the Economy 2007-08. PMEAC. 7 March 2011.
29. Web site: Economic Outlook for 2007-08. PMEAC. 7 March 2011.
30. Web site: Economic Outlook 2006-07. PMEAC. 7 March 2011.