Season of elections is coming. Starting from Gujarat it will go on until 2019. But the fears of economic slowdown has apparently made the Union government led by Prime Minister Narendra Modi jittery, even as it remains confident of a turnaround. On Monday, Modi government took a new step to give a push to the economy. It appointed four economists in the Economic Advisory Council (EAC) to be headed by NITI Aayog member Bibek Debroy, including Surjit Bhalla, Rathin Roy and Ashima Goyal as part-time members. NITI Aayog’s Principal Advisor Ratan Watal will serve as its member secretary.
Members of Modi’s EAC come with solid credentials as economists and champions of liberal economics. They have also been votaries of Modi’s past economic decisions like demonetisation. As the note ban is being majorly blamed for the current slowdown, the four wise heads may have a tough task ahead of themselves. However, their role will be primarily to give inputs to the PM, which he may not get from within the government.
An official statement describing the council said, “The five-member council consists of economists of high repute and eminence,” said the statement. The council will “analyse any issue, economic or otherwise, referred to it by the prime minister and advising him thereon,” Also, it will “address issues of macroeconomic importance” and present its views to the prime minister. “This could be either suo-motu or on reference from the prime minister or anyone else.”
There is a growing sense that Modi’s decision to set up the EAC may have come a bit late – over three years after he assumed power as PM and at a time when the GDP has slipped to 5.7 per cent in April-June quarter, the lowest since May 2014. Former PM Atal Bihari Vajpayee had constituted PMEAC with 10 members, including economists like PN Dhar, IG Patel and Arjun Sengupta within months of coming to power in 1998. His successor, Manmohan Singh also set up the EAC led by Suresh Tendulkar in UPA-1 and by C Rangarajan in UPA-II.
The fact that it took Modi three years to realise the need for EAC raises questions over its appointment now, even as the PM is not bound by its advice. Neither were Singh or Vajpayee. Economists think in one direction, politicians in the other. So a genuine question also arises as to what this council will be able to achieve for Modi and India as political parties, including BJP, gears up for electoral battles ahead.
Starting from Gujarat by the end of this year, states like Karnataka, Meghalaya, Nagaland, Tripura, Madhya Pradesh, Chhattisgarh, Rajasthan, Mizoram will go to polls in 2018.
A Bloomberg report today said that Modi is “stuck between a rock and a hard place”. It claimed that India’s economy has been slowing for the past five quarters, largely due to “chaotic” rollout of GST and “surprise” currency ban of last year. These have triggered talks of stimulus measures. But Modi’s “options are limited.” However, if predictions by international agencies like IMF is to be believed, the economy is likely to come on track in the coming quarters.