PM Narendra Modi sets up economic advisory council; Bibek Debroy chairman

Prime Minister Narendra Modi on Monday set up an Economic Advisory Council to PM (EAC-PM) in the backdrop of a slowing economy and amid criticism that the government is not doing enough to get the growth momentum back.According to reports, Bibek Debroy, a member of NITI Aayog, has been appointed as the Chairman of this economic review body.[caption id="attachment_3126500" align="alignleft" width="380"] File image of Bibek Debroy. Image credit: Forbes India[/caption]Other members include Ratan Watal, Surjit Bhalla, Rathin Roy and Ashima Goyal as part-time members. The council will analyse issues, economic or otherwise, referred to it by the Prime Minister and advise him accordingly. The EAC-PM will also address macroeconomic issues of import, suo moto or on orders from PM Modi, and present views on the same to the PM.The growth scenario looks far from promising for an ambitious economy. The warning signals are all around. India’s gross domestic product (GDP) grew at 5.7 percent in June quarter, the slowest pace in more than three years and the index of industrial production (IIP) grew at a dismal 1.2 percent in July compared with 4.5 percent a year ago. Bank credit growth is showing no signs of a pick-up. In July, non-food bank credit growth of schedule commercials banks slowed to 5.3 percent as compared with a rise of 8.3 percent in the same month last year.Credit growth to industries hasn’t shown any improvement for a while. While top-rated companies have moved to the money market, small firms are facing a severe fund drought, which in turn, impacts production and employment generation. On the other hand, inflation is inching up. The consumer price index-based inflation jumped to a five-month high of 3.36 percent in August from 2.36 percent in July. This means, the room for the monetary policy committee (MPC) to offer further rate cut boost to the economy is limited.The PM-EAC has been consituted several times since Independence. The last chairman of the council, C. Rangarajan resigned in May 2014 after the defeat of Congress-led UPA regime in the general elections.