Economic Advisory Council to the Prime Minister (PMEAC)

Economic Advisory Council to the Prime Minister (EAC-PM or PMEAC) has been constituted, reconstituted, disbanded and revived from time to time. During UPA tenure, this panel was headed by former RBI governor C Rangarajan. After coming to power in 2014, the Modi government disbanded it but then again revived and reconstituted in September, 2017. The recent revival and reconstitution is important because of government’s aggressive economic measures expected in upcoming Union Budget 2018.

What is PMEAC?

Economic Advisory Council to the Prime Minister (PMEAC) is a non-constitutional, non-permanent and independent body, constituted with the prime and sole aim of giving advice to prime minister on economic matters such as inflation, GDP changes, export-import changes, creating supporting environment for increased trade and commerce. The term of PMEAC members is co-terminus with that of the Prime Minister.

What is Composition or Organisation of PMEAC?

Current organization of the PMEAC is as follows:

1. NITI Aayog member Bibek Debroy – the chairman of the Council,
2. NITI Aayog’s principal advisor and former Finance Secretary Ratan Watal as member-secretary.
3. Economist Surjit Bhalla,
4. National Institute of Public Finance and Policy director Rathin Roy
5. Indira Gandhi Institute of Development Research professor Ashima Goya

What are Key Functions of PMEAC?

The committee is mandated to provide neutral viewpoint of any issue which is referred to it. Its key functions include:

• To submit periodic reports to the Prime Minister related to macroeconomic developments and issues which will have implications of the economic policy.
• Analyze any topic, issue which is assigned by the PM and provide advice to them
• Analyse macroeconomic issues which have high importance and present the views to the PM.
• Any other task which is assigned by the Prime Minister.

The newly constituted PMEAC has met for two times in recent months. What has been outcome of these meets?

After the PMEAC was reconstituted in September 2015, the body has met twice; latest meet was on November 10, 2017. Following are key points from these meetings:

PMEAC identified 10 priority areas for revising growth and employment

While acknowledging that there are issues with growth and employment, it identified 10 priority areas on which government should work. These 10 priority areas are:

1. Employment and job creation
2. Informal sector and integration
3. Fiscal framework
4. Monetary policy
5. Public expenditure
6. Institutions of economic governance
7. Agriculture and animal husbandry
8. Patterns of consumption
9. Production
10. Social sector.

The second meet of PMEAC was held on November 10, 2017. The highlights of this meeting are as follows:

• The council spelt out a road map for stepping up skill development, job creation and enhanced resource investment in the social sector.
• It made recommendations to guide the framework for the Fifteenth Finance Commission including the “incentivization of States for achieving Health, Education and Social Inclusion outcomes”.
• It also decided to formulate the design of a new Economy Tracking Monitor that will link economic growth indicators with social indicators for last mile connectivity.
• It deliberated on improvements required in National Accounts and innovative steps needed for “unlocking the growth, exports and employment potential of growth drivers” including through transformation of India’s Gold Market.
• It also took stock of the economic and social analysis done by the theme groups and evolving initiatives led by different Members.

What are concerns related to overlap of mandates of NITI Aayog, CEA and PMEAC?

EAC and NITI Aayog are closely related as they share members. For example, the head of PMEAC is a NITI Aayog member. At times the functions overlap and appear that they are involved in the similar or even same field. Similarly, the office of chief economic adviser (CEA) is already providing expert policy advice to the government. Apart from this, the government also receives policy-related suggestions from various bureaucrats, industry, consumer groups, think tanks, academia, media and experts. Thus, the key concern is – what is the relevance of PMEAC when the space of providing advice to government is already overcrowded?

The answer lies within the question. Most of the space (of providing advice to government) is filled by the “interest groups” that directly or indirectly represent a particular group of stakeholders. The government’s decisions cannot be based on particular interest groups and there is a need to reach out to those who remain unheard. However, this requires the PMEAC to adopt all-inclusive approach in policymaking.