Better late than never

PM Narendra Modi’s decision to resurrect the Economic Advisory Council (EAC) after more than three years can only be an indirect admission that all is not well with the economy. The GDP growth rate has been a three-year low at 5.7 per cent in the June quarter mainly because of ill-advised demonetisation and hasty implementation of GST. The impact of economic slowdown is now experienced by almost the entire population across the country because of shrinking job market and soaring prices of commodities, including petrol and diesel. It is, however, a different matter that the chief custodian of the economy, Finance Minister Arun Jaitley remains in denial mode as he insisted on justifying before the BJP leaders the government’s demonetisation misadventure on Monday.

Thankfully, PM Modi’s action has not only acknowledged the need to do things differently, but also underscored the importance of an institution that had immensely helped his predecessors Manmohan Singh and Atal Bihari Vajpayee. Singh had picked up one of the most competent economists of that time, Dr C Rangarajan to chair the EAC. Its importance could also be judged by the fact that the then Prime Minister Atal Bihari Vajpayee was himself the chairman. He had inducted high-profile members into his council such as Dr Ashok Gulati, the renowned agricultural economist, and Dr IG Patel, a former RBI Governor.

When PM Modi assumed power in 2014, he scrapped the institution. Perhaps in his overconfidence he thought that he did not require professional advice from a group of economists. Modi has now constituted a five-member body headed by NITI Aayog member Bibek Debroy; though the economists handpicked are not the ones to command great professional respect. The order issued on Monday has empowered the council to ‘suo motu’ raise the issues impacting the economy.  As per the notification, it is expected that the council would remain an “independent” body to give advice on economic and related issues to the Prime Minister. It is now imperative on the part of PM Modi that the advisory body’s ideas be factored in policy choices.