Noted economist and member of the Economic Advisory Council to the Prime Minister (EAC-PM) Rathin Roy today dismissed lowering of India's growth projections by the International Monetary Fund and the World Bank, saying they often go "wrong". Besides Debroy, other members are: Principal Adviser to NITI Aayog Ratan P Watal as member secretary and Surjit Bhalla, Rathin Roy and Ashima Goyal as part time members. "Next few months our focus will be on the preparation of the budget", he said.
To a question on why the PMEAC has taken upon itself the issue related to monetary policy when there is a Monetary Policy Committee tasked with fixing the benchmark policy interest rates, Debroy said the PMEAC will look at the structural issues and not wade into the nitty-gritty of rate setting. The council, at its meeting, identified 10 key themes around which it will structure its report in the coming months. These include economic growth, job creation, fiscal framework, monetary framework, social sector, the institution of economic governance among others.
The Council, in its meeting, acknowledged the slowdown in the Indian economy and has asked its members to come up with detailed papers in the next Council meeting. The Council, which met for the first time on Wednesday, has identified ten themes, including economic growth and job creations, that need attention, while acknowledging the slowdown in the economy.
EAC member Rathin Roy said that "the consensus is there is economic slowdown, we will examine its causes".
The Council was set up with the approval of PM Narendra Modi late last month.
The five-member Council was unanimous that the government shouldn't stray from the path of fiscal consolidation, thus ruling out a fiscal stimulus to reverse the downturn in the economy.
The majority view in the government is not inclined towards relaxing its fiscal deficit target of 3.2% of gross domestic product for the current financial year. "The World Bank's growth projections are 65 per cent wrong", he said when asked to comment on lowering of growth projections by global multilateral lending agencies.
According to Debroy, chief economic advisor in the finance ministry Arvind Subramanian, who made a presentation at the meeting, stressed on policy interventions to revive investments and exports.
The IMF on Tuesday lowered India's growth forecast for the current fiscal by 0.5 percentage points to 6.7 per cent, while the World Bank on Wednesday pegged India's economic expansion at 7 per cent, down from 7.2 per cent projected earlier. The country's GDP growth has been dipping consistently for several quarters.