The Economic Executive Council notified by the Finance Ministry includes a sort of pared-down Economic Committee of the Cabinet (EEC), along with the Finance Secretary and State Bank Governor. There is an overlapping agenda, with the ECC bound to refer its decisions to the Cabinet for approval. The exclusion from the new body of ministers dealing with individual aspects of the economy, like shipping, privatization, shipping or railways, while including the Energy Ministers and the State Bank Governor, indicates that the new body may be tasked to deal with circular debt, a problem in which the IMF has been taking a deep interest.
However, that same IMF has imposed such detailed and specific conditions for the restoration of its suspended Extended Structural Adjustment Facility, that even if it was clarified why the new Council was set up, there is precious little it could do in the way of policy decisions. If it merely recommends IMF prescriptions, it will be pointless duplication; if it recommends a different course of action, it or the IMF will have to be ignored, which in practice means it will be ignored.
The setting up of the Council indicates that the government is not happy with the present economic decision-making machinery, not so much because it has any sweeping reforms to introduce, as because it does not like the diffraction the economy is going, which would be understandable when viewing the dismal figures for the current account deficit, the trade deficit and inflation, with the precipitous drop in rupee parity and massive interest rate hikes failing to arrest the trade deficit. With elections less than two years away, the government has every reason to be concerned. However, the solution does not seem to lie in a council which includes some of the people who landed the economy in the situation it already is in. If the Prime Minister is, despite everything, happy with his team, he has no need to put them in a new body, while also keeping the ECC.
