PM’s economic advisory body returns – at a time of both continuity and change: |ForumIAS

Brief overview

The article talks about the history and evolution of Prime Minister’s Economic Advisory Council (PMEAC)

The first PMEAC under Indira Gandhi

After returning to power in 1980, Indira Gandhi faced formidable economic challenges.
The impact of the global oil shock and drought was reflected in a decline in national income and soaring prices.
To arrest the slide and set the economy on the path to stability and growth, Indira brought in Sukhamoy Chakravarty, who had, in the mid-70s, headed the Planning Commission’s Policy Perspective Division
In its early days, the Council had the famed economist K N Raj, besides C Rangarajan and Vijay Kelkar.

The PMEAC after PM Indira Gandhi and through the 1990s

Sukhamoy Chakravarty continued in the post even after Rajiv Gandhi succeeded Indira in 1984.
Rajiv Gandhi government acknowledged the input of the council which had flagged the emerging faultlines and warned of a fiscal imbalance.
Manmohan Singh headed the Council briefly when Chandra Shekhar was Prime Minister.
After Singh, Bimal Jalan headed the Council.
Under the P V Narasimha Rao government, of which Manmohan Singh was Finance Minister, the Council held only a few meetings.

PMEAC under PM Atal Bihari Vajpayee

The economy was again in trouble after the Asian crisis.
PM Vajpayee decided to chair the council himself in 1998.
A 12-member Council for Trade and Industry was also appointed.
His EAC had a galaxy of economists including the former RBI Governor I.G. Patel and P.N. Dhar
Through this period, the Finance Ministry remained dominant in economic policymaking.

PMEAC under PM Manmohan Singh

In 2004, Manmohan Singh got his former RBI colleague Rangarajan to head the PMEAC, which was now more compact, with fewer than half dozen members.
Rangarajan had the status of cabinet minister — and with a powerful Finance Ministry under P Chidambaram and later Pranab Mukherjee, and a Planning Commission headed by Montek Singh Ahluwalia, the Council was seen as the advisory group best equipped to provide independent advice to the PM.
During 2004-14, the Council often brought out its own review of the economy, besides reports on a range of issues.
Manmohan Singh’s Council was the most influential in the over three-decade history of the institution.
It drew its strength from the confidence and trust that the economist PM had in the Council head.

PMEAC reconstituted under PM Modi

40 months into the government’s term, a new PMEAC has been announced, headed by NITI Aayog member Bibek Debroy, to advise the Prime Minister at a time of increasing concern over the economic slowdown
The revived Council — with Surjit Bhalla, Rathin Roy and Ashima Goyal as members and former finance secretary Ratan Watal as Secretary — will analyse economic and other issues that the Prime Minister refers to it.
Like in the past, the Council has been revived at a time when the economy faces headwinds.
The pressure for quick fixes will be high as 2019 isn’t far.