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Governance Bytes: New faces in PMEAC

Markets at policy table: New faces in PMEAC

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In News: New faces in PMEAC

  • The central government has appointed three new members for two years as part-time members of the economic advisory council of the Prime Minister (EAC-PM).
  • The EAC-PM advises the Prime Minister on macroeconomic issues and other matters referred to it by the PM.
New faces in PMEAC
Neelkanth Mishra, Nilesh Shah and V. Anantha Nageswaran

News Summary: New faces in PMEAC

  • The government has reconstituted the Economic Advisory Council to the Prime Minister (PMEAC or EAC-PM) by inducting 3 part-time members: Nilesh Shah (MD of Kotak Mahindra Mutual Fund), Neelkanth Mishra (MD, India Strategist and co-head of equity strategy, Asia Pacific for Credit Suisse), and V Anantha Nageswaran (dean of Institute of Financial Management and Research).
  • The move is seen as an effort to bring the advisory council’s ears closer to the ground and to market realities.
  • At a time when various indicators including bank credit growth, sales of passenger vehicles, two wheelers and retail consumption are showing a marked slowdown, appointment of credible market names could help build confidence in the market.

New looking PM-EAC:

  • The addition of 3 new members comes shortly after changes to EAC in September, when two part-time members were dropped and a new part-time member was added.
  • Bibek Debroy and Ratan P. Watal will continue to be the chairman and member secretary, respectively, as the two full-time members.
  • Ashima Goyal (of Indira Gandhi Institute of Development Research) and the recent inductee Sajjid Chenoy (JP Morgan’s chief India economist) are the other part-time members.

About: PM’s Economic Advisory Council (PMEAC)

  • Economic Advisory Council to the Prime Minister (PMEAC] is a non-constitutional, non-permanent and independent body constituted to give economic advice to the Government of India, specifically the Prime Minister.
  • The Council was set up with a view to provide a sounding board for inculcating awareness in government on the different point of view on key economic issues.
  • It is common for the Council to be reconstituted time and again with different organizational structures headed by various economists who are of recognized international eminence.

Organization:

  • The PMEAC is chaired by a Chairperson and consists of eminent economists as members.
  • After the latest reconstitution, it now has a Chairperson, Member Secretary and two part-time members.
  • It is supported in its functions by a team of officials and administrators.
  • There is no fixed definition on the exact number of members and staff of the PMEAC.
  • At one point, it was even chaired by the then Prime Minister Atal Bihari Vajpayee himself.
  • For administrative, logistic, planning and budgeting purposes, the NITI Aayog replaced erstwhile Planning Commission to serves as the Nodal Agency for the PMEAC.

The evolution of PM’s Economic Advisory Council:

Background:
  • The PMEAC came into existence in the 1980s, in the backdrop of a difficult economic situation. The global oil shock and drought had led to a decline in the national income, and soaring prices.
  • The then Prime Minister Indira Gandhi needed to arrest the slide and set the economy on the path to stability and growth. She brought in economists into the council to advise her.
  • Later when the economy was in trouble after the 1997 Asian crisis, the Economic Advisory Council was expanded with the Prime Minister himself at its head.
  • During the 2004-14 decade, the Council played an important role and often brought out its own review of the economy, besides reports on a range of issues.
  • The new government, shortly after coming to power in 2014, disbanded the then PMEAC.
  • The Council was again reconstituted with Bibek Debroy as chairman in 2017 to focus on core issues since a lot of structural changes are taking place in the economy.
The role of PM’s Economic Advisory Council since its inception:
  • The primary role of the PMEAC is to give a neutral viewpoint on economic policy matters that are referred to it by the Prime Minister.
  • It takes notice of issues of national and international macroeconomic importance and presents views to the PM.
  • At various times, it published reports on the annual Economic Outlook and Review of the Economy of India.

Also Read: Extra Bytes: (India slips Competitiveness Index)

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