Economic Advisory Council
Encyclopedia
Economic Advisory Council to the Prime Minister of India
(PMEAC) is a non-constitutional, non-permanent and independent body constituted to give economic advise to the Government of India
, specifically the Prime Minister. The council serves to highlight key economic issues facing the country to the government of India from a neutral viewpoint. It advises the Prime Minister on a whole host of economic issues like inflation
, microfinance
, industrial output, etc.
The last PMEAC, which was constituted on 29 December 2004, headed by Suresh Tendulkar
resigned upon the completion of the then Union government's term on 21 May 2009.
The current PMEAC was subsequently reorganized in August 2009 .
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. Additionally it prepares a monthly report of economic developments that need to be highlighted to the PM. For this purpose it closely monitors national and international economic developments and trends and develops appropriate policy responses for the PM.
It publishes reports on the annual Economic Outlook and Review of the Economy of India.
himself.
For administrative, logistic, planning and budgeting purposes, the Planning Commission of India
serves as the Nodal Agency for the PMEAC.
is the current Chairman of the PMEAC. He was appointed in August 2009. The Chairman has the rank equivalent to a Cabinet Minister of India.
In the current PMEAC, the members of the Council are given the rank of Minister of State
. At one time even the current Prime Minister Manmohan Singh
was a member of the PMEAC
, monetary measures
, etc. Views of the PMEAC are also sought after to better understand the prospects of economic performance of India like its growth rates as well as on policy matters like autonomy of regulators and cotton export policy. In February 2011, PMEAC recommended to the government
to initiate the process of fiscal consolidation given that the international financial crisis has started to ease and the government
had to re-initiate its commitment to the Fiscal Responsibility and Budget Management Act
.
Prime Minister of India
The Prime Minister of India , as addressed to in the Constitution of India — Prime Minister for the Union, is the chief of government, head of the Council of Ministers and the leader of the majority party in parliament...
(PMEAC) is a non-constitutional, non-permanent and independent body constituted to give economic advise to the Government of India
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
, specifically the Prime Minister. The council serves to highlight key economic issues facing the country to the government of India from a neutral viewpoint. It advises the Prime Minister on a whole host of economic issues like inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
, microfinance
Microfinance
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
, industrial output, etc.
History
The PMEAC has been constituted several times since the independence of India.The last PMEAC, which was constituted on 29 December 2004, headed by Suresh Tendulkar
Suresh Tendulkar
Suresh D. Tendulkar was an Indian economist and former chief of National Statistical Commission. Tendulkar was a member of the Prime Minister's Economic Advisory Council from 2004 to 2008 and as its Chairman from 2008 to 2009 when C. Rangarajan vacated the post to enter the Rajya Sabha...
resigned upon the completion of the then Union government's term on 21 May 2009.
The current PMEAC was subsequently reorganized in August 2009 .
Functions
Terms of Reference as defined by the PMEAC are as follows:- Analyzing any issue, economic or otherwise, referred to it by the Prime Minister and advising him thereon;
- Addressing issues of macroeconomic importance and presenting views thereon to the Prime Minister. This could be either be suo-moto or on a reference from the Prime Minister or anyone else;
- Submitting periodic reports to the Prime Minister on macroeconomic developments and issues with implications for economic policy;
- Attending to any other task as may be desired by the Prime Minister from time to time.
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. Additionally it prepares a monthly report of economic developments that need to be highlighted to the PM. For this purpose it closely monitors national and international economic developments and trends and develops appropriate policy responses for the PM.
It publishes reports on the annual Economic Outlook and Review of the Economy of India.
Organisation
The PMEAC is chaired by a Chairperson and consists of eminent economists as 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 VajpayeeAtal Bihari Vajpayee
Atal Bihari Vajpayee is an Indian statesman who served as the tenth Prime Minister of India three times – first for a brief term of 13 days in 1996, and then for two terms from 1998 to 2004. After his first brief period as Prime Minister in 1996, Vajpayee headed a coalition government from...
himself.
For administrative, logistic, planning and budgeting purposes, the Planning Commission of India
Planning commission of India
The Planning Commission is an institution in the Government of India, which formulates India's Five-Year Plans, among other functions.-History:...
serves as the Nodal Agency for the PMEAC.
Chairman
As of February 2011, Dr. C. RangarajanC. Rangarajan
C. Rangarajan is an Indian economist and a distinguished former Member of Parliament and Governor of the Reserve Bank of India. Currently, he is the Chairman of the Prime Minister's Economic Advisory Council...
is the current Chairman of the PMEAC. He was appointed in August 2009. The Chairman has the rank equivalent to a Cabinet Minister of India.
Members
The following are currently the members of the PMEAC:- Dr. M Govinda Rao (Director-General, National Institute of Public Finance & Policy)- Member
- Dr. Saumitra Chaudhury (Economic Adviser, ICRA (Information and credit rating services), India) - Member
- Dr. Vijay Shankar Vyas (President, Asian Society of Agricultural Economists)- Member
- Sh. Suman K. Bery (Director-General, National Council of Applied Economic Research) - Member
In the current PMEAC, the members of the Council are given the rank of Minister of State
Minister of State
Minister of State is a title borne by politicians or officials in certain countries governed under a parliamentary system. In some countries a "minister of state" is a junior minister, who is assigned to assist a specific cabinet minister...
. At one time even the current Prime Minister Manmohan Singh
Manmohan Singh
Manmohan Singh is the 13th and current Prime Minister of India. He is the only Prime Minister since Jawaharlal Nehru to return to power after completing a full five-year term. A Sikh, he is the first non-Hindu to occupy the office. Singh is also the 7th Prime Minister belonging to the Indian...
was a member of the PMEAC
Officials
- Sh. K. P. Krishnan - Secretary
- Ms. Padma Iyer Kaul - Director
- Ms. Seema - Deputy Advisor
- Ms. Vibeesh - Research Officer
Impact
The periodic reports of the PMEAC - the annual Economic Outlook and Review of the Economy - are the most widely followed. Additionally the remarks and opinions of the Chairman and members of the PMEAC get widespread media coverage and are influential in formulation of the policies of other economic agencies, financial institutions and businesses. Many financial periodicals publish interviews and speeches of PMEAC Chairman to understand the most critical economic woes facing the country like inflationInflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
, monetary measures
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
, etc. Views of the PMEAC are also sought after to better understand the prospects of economic performance of India like its growth rates as well as on policy matters like autonomy of regulators and cotton export policy. In February 2011, PMEAC recommended to the government
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
to initiate the process of fiscal consolidation given that the international financial crisis has started to ease and the government
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
had to re-initiate its commitment to the Fiscal Responsibility and Budget Management Act
Fiscal Responsibility and Budget Management Act
The Fiscal Responsibility and Budget Management Act, 2003 was enacted by the Parliament of India to institutionalize financial discipline, reduce India's fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget...
.
Reports
Among the widely read periodic reports of the PMEAC - the annual Economic Outlook and Review of the Economy, the following are the latest editions.- Review of the Economy 2010-11
- Economic Outlook for 2010-11
- Review of the Economy 2009-10
- Economic Outlook for 2009-10
- Review of the Economy 2008-09
- Economic Outlook 2008-09
- Review of the Economy 2007-08
- Economic Outlook for 2007-08
- Economic Outlook 2006-07
Latest Assessment 2010-11
Based on the latest assessment of the Economy of India for the financial year 2010-11, the EAC has highlighted the following:- Economic growth projected at 8.6% for FY2010-11 and 9% for FY2011-12
- Inflation estimated to be at 7% by March-end
- Agriculture sector projected to grow 5.4% in 2010-11
- Industry sector to expand at 8.1% and services sector at 9.6%
- Fiscal deficit to come down to 5.2% in FY11
- Exports estimated to increase to $230 billion in FY2010-11
- Current account deficit to be 3% of GDP
- Budgeted fiscal and revenue deficit beyond comfort zone
- Capital inflows projected at $64.6 billion this fiscal
- Investment rate expected to be 37%
- Domestic savings rate expected to be 34%