Published: Thu, October 12, 2017
Markets | By Rosalie Gross

Economic slowdown, will study causes: PM's advisors

Economic slowdown, will study causes: PM's advisors

The economic advisory council, formed by Prime Minister Narendra Modi last month, held its first meeting on Wednesday.

The meeting attended by members, including leading economists Surjit Bhalla, Rathin Roy, Ashima Goyal and member secretary Ratan P Watal, also former finance secretary and principal adviser NITI Aayog, took stock of the current economic, fiscal and monetary policy environment and identified key issues that it would focus on.

When asked what would be the recommendations of the council on these key issues, an evasive Mr Debroy said those will be for the Prime Minister's consumption and would not be announced through the media.

The council has identified ten themes around which a report will be structured in the next few months. He said that economic growth, employment and job creation, informal sector and integration of informal sector, fiscal framework, monetary policy, public expenditure and efficiency of public expenditure, institutions of the economic governance, agriculture and animal husbandry were the core issues that were discussed today.

After its first meeting, the Council arrived at a broad consensus about the slowdown but also said there were green shoots, which would be visible in the months to come.

Chief Economic Advisor (CEA) Arvind Subramanian made a presentation to the Council and focused attention on accelerating economic growth, including investments and exports, using a combination of different policy levers.

The Council comprising of reputed economists and experts "is mandated to analyze all critical economic and other issues referred to it by the Prime Minister and advising him thereon".

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EAC-PM Chairman Debroy said improvement in growth had already started and would be visible in the coming months.

India's economic health deteriorated due to the growth data which slipped to a three-year low of 5.7 per cent in the first quarter of the current fiscal.

The council also assessed that the government needs to provide some sort of fiscal stimulus to revive economic growth.

To a query on job losses in the wake of demonetisation and implementation of the Goods and Services Tax (GST), Debroy said, "This issue was not examined in today's meeting".

If the government does not deviate from its target of reining in its fiscal deficit at 3.2 per cent of the gross domestic product (GDP), providing stimulus would be nearly impossible. "In a country like India, you can not get good data on employment and jobs from enterprise surveys. The World Bank's growth projections are 65 per cent wrong", he said, when asked to comment on the lowering of growth projections by multilateral lending agencies.

The industry is seeking fiscal stimulus to tide over the economic slowdown.

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