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Modi Sets Up Economic Advisory Council To Spur Growth

Modi sets up economic advisory panel led by NITI Aayog member Bibek Debroy.

Finance Minister Arun Jaitley speaks with Prime Minister Narendra Modi (Photographer Kuni Takahashi/Bloomberg) 
Finance Minister Arun Jaitley speaks with Prime Minister Narendra Modi (Photographer Kuni Takahashi/Bloomberg) 

Prime Minister Narendra Modi has formed an economic advisory council as the government mulls options to revive growth in Asia’s third largest economy.

The five member panel will be headed by government think-tank NITI Aayog member and economist Bibek Debroy, according to a media release by the Press Information Bureau. The other members will include Surjit Bhalla, Rathin Roy, Ashima Goyal as part-time members, while Ratan Watal will be its member-secretary, the release added.

Modi Sets Up Economic Advisory Council To Spur Growth

“The composition of the panel is more or less on the right lines in terms of their ability to think out of the box,” said Saugata Bhattacharya, chief economist at Axis Bank. He would “wait and watch” what role the council plays.

The move comes at a time when India’s economic growth has slowed to a three-year low in the aftermath of demonetisation and and ahead of the implementation of the Goods and Services Tax regime. Lack of private sector investments, mounting bad loans in the Indian banking system and a widening fiscal deficit have compounded the slowdown. This has increased pressure on the Modi administration to spur investments, create jobs for India's expanding workforce and kickstart growth.

The panel has been constituted for the first time since Modi’s election victory. The previous economic advisory council under Manmohan Singh had resigned in May 2014 after his term ended, as stipulated by norms.

The most important thing for the council will be to revive private investments which have been steadily falling, said C Rangarajan, who headed the previous economic advisory council under Singh. “There are a number of areas such as closed monitoring and critical analysis of stalled projects which can lead to immediate benefits,” he told BloombergQuint in a telephonic interaction.

Another area the panel will have to look at is how banks can be revived through recapitalisation, thereby enabling them to lend again, he added while welcoming its formation.

The new panel will provide the government with “intellectual bandwidth” on the economy which was missing for the first three years, said AK Bhattacharya, editor of the Business Standard newspaper.

The advisory panel will be an independent body advising the Prime Minister on economy related issues. It will analyse any issue, economic or otherwise, referred to it by the Prime Minister. The panel will, on its own, address issues of macroeconomic importance from time to time, according to the terms of reference of the body.