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

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

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.