Discuss the composition and functions of Cabinet Committee on Economic Affairs (CCEA). What is the relevance of creation of additional bodies comprising several ministers such as current government's Alternative Mechanism (AM) and previous government's GoM (Group of Ministers)?

CCEA is one of the standing committees of the cabinet constituted by the government of India. CCEA comprises 11 ministers and three special invitees. PM is the chairman of CCEA.
Functions of CCEA

  • To Continuously review economic trends, problems and prospects in order to frame an integrated economic policy
  • It directs and coordinates all policies and activities in the economic field including foreign investment that require policy decisions at the highest level.
  • After the scrapping of the cabinet committee on prices, cabinet committee on UIDAI, Cabinet committee on WTO, CCEA handles the functions of these committees.
    • For example, it handles price controls of industrial raw materials and products, increases in prices of essential commodities or bulk goods. It takes decision on supply, imports, and exports of essential commodities
    • CCEA also handles matters regarding fixation of prices of agricultural products as well as reviewing the progress of activities related to rural development.
  • CCEA review performance of PSU, structural and financial restructuring such as matters relating to disinvestment including cases of strategic sale.
  • CCEA also lays down priorities for public sector investment

CCEA handles matters which involve various Ministries and departments therefore in order to speed up the process Central government is planning to create Alternative Mechanism (AM). It is a 3 member body which will be headed by the finance minister and will include Road minister and relevant administrative minister. The major difference in Group of Ministers(GoM) & AM is that GoM had multiple ministers which made consensus difficult while AM is 3 member body with a clear mandate which will ensure quick decisions.
Strategic disinvestment aspect which was handled by CCEA will now be delegated to the Alternative Mechanism.  Along with it, the merger of banks, the sale of minority stakes in Central Public Sector Enterprises and buyback offer will also be handled by Alternative Mechanism. In case of strategic disinvestment, AM will invite the expressions of interest and finalize the terms and conditions of sale. CCEA approval will be required only in the end for the approval of bid amount and the selection of strategic buyer/partner. However, in case of minority stake sale in CPSE,  AM has more powers like taking decisions on the quantum of disinvestment, fixing the price band as well as the final price.
In this way CCEA approval at different stages will not be required, this will ensure quick decision making.

Question for UPSC Mains:
Discuss the composition and functions of Cabinet Committee on Economic Affairs (CCEA). What is the relevance of creation of additional bodies comprising several ministers such as current government's Alternative Mechanism (AM) and previous government's GoM (Group of Ministers)? ET

Published: August 25, 2017 | Modified:June 27, 2019

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