The newly constituted Prime Minister’s Economic Advisory Council (PMEAC) has acknowledged slowdown in economy, but it could not arrive at a consensus as to what caused the same. The Bibek Debroy-headed panel in its first meeting here on Wednesday identified 10 key areas to focus its recommendations.
The council agreed on economic slowdown, Debory said, adding that it would examine the causes behind it. 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 & animal husbandry; patterns of consumption & production; and social sector. The report will be structured on these identified areas.
Of the 10 themes the council may pick five most important areas so that reports on them are submitted early. “Our role is to give advice to the PM,” Debory said.
“The primary role and the only role is to have recommendations to the prime minister. They are not meant to be announced in interactions with the media,” he said, adding that they would make specific recommendations that can be implemented.
The PMEAC chairman also suggested that the government should stick to its fiscal consolidation roadmap. Stimulus package to the industry to revive economy should not be at the cost of fiscal prudence. The government has fixed the fiscal deficit target at 3.2 per cent for the current fiscal and three per cent for the next financial year.
The industry is seeking fiscal stimulus to tide over the economic slowdown as the economic growth has slipped to a three-year low of 5.7 per cent in the first quarter of the current fiscal.
Chief economic adviser Arvind Subramanian made a presentation to the council on ways to accelerate economic growth, including investments and exports, by using a combination of different policy levers.
PMEAC member Rathin Roy dismissed lowering of India's growth projections by the IMF and the World Bank, saying they often go wrong.
The International Monetary Fund (IMF) has lowered India’s growth forecast for the current fiscal by 0.5 percentage points to 6.7 per cent and the World Bank has pegged GDP to grow at 7 per cent, down from 7.2 per cent projected earlier.
The Asian Development Bank too lowered India’s current fiscal growth to 7 per cent from 7.4 per cent. The Reserve Bank of Inida (RBI) also cut economic growth forecast to 6.7 per cent from earlier projection of 7.3 per cent.
Roy said: “IMF’s growth projections are 80 per cent wrong...World Bank’s growth projections are 65 per cent wrong.”
The PMEAC will bring technical and professional inputs to policy-making, he said. Replying to a question, Debroy said PMEAC will take inputs from the Reserve Bank and the Monetary Policy Committee while considering issues related to monetary policy framework.
The council will have another meeting in November and it will meet the stakeholders in between.k