It looks as though Finance Minister Arun Jaitley is being sidelined with the newly appointed Economic Advisory Council hijacking his role and directly reporting to the Prime Minister on financial roadmap.
After a series of financial setbacks (one could also call it disasters), Finance Minister Arun Jaitley seems to be slowly getting sidelined. That seems to be the message from the newly constituted Economic Advisory Council to the Prime Minister (EAC-PM) which bluntly asked the government today to stick to its fiscal consolidation road map.
The council also went against a suggestion earlier made by Jaitley regarding financial stimulus to boost a sagging economy. The council’s recommendation is solidly against reports emanating from the finance ministry that the government might inject a fiscal stimulus in the tune of Rs 50,000 crore to boost the state of economy.
Disagreeing with Jaitley, the Council suggested that stimulus to the industry should not be at the cost of fiscal prudence.
“There is a consensus (among the members)… that the fiscal consolidation exercise should not be deviated,” the council’s chairman Bibek Debroy told the media on Wednesday.
Jaitley is not directly responsible for the financial mess. Demonetisation was the game plan of Prime Minister Narendra Modi. But this was later thrust on to the shoulders of Jaitley; the Goods and Services Tax or the GST was so diluted, tweaked and made cripplingly weak that it was much to the dislike of the Finance Minister.
Again, Jaitley had to put up a defence for a war that he had not started in the first place.
With Modi facing flak over the economic crisis, poor growth and with employment graph nose-diving, Jaitley is being made the scapegoat. Modi hopes that the Advisory Council will work up a magic, which it will not considering the financial headwinds.
Donning the role of a super Finance Minister, the Economic Advisory Council to the Prime Minister has identified 10 issues including economic growth and job creations to work upon initially. In the first few months, the super FM will focus on the Union budget that will be presented in the first week of February.
This again means that Jaitley will not get a free hand in making of the budget or plans to kickstart the economy, but will again probably end up playing the role of a scapegoat.
First it was the PM who decided on financial policies and now Jaitley seems to have another boss in the Advisory Council. To make matters worse for Jaitley, the council will report directly to the Prime Minister.
The council which had been set up on September 26 with the approval of the Prime Minister formally met on Wednesday. Apart from the members of the council, the meeting was also attended by Chief Economic Adviser Arvind Subramanian who gave a presentation to the EAC-PM.
“Today, it was the first formal meeting. We will also have smaller meetings with stakeholders…We will also have another formal meeting next month and give recommendations to the prime minister,” Debroy said.
Debroy made it clear that “Whenever we will take any view on monetary policy, we will discuss with RBI…It is not our job to push those recommendations to the finance ministry, our job is to report to the prime minister,” he said.
In short, the Finance Minister is nowhere in the picture.
The council will make recommendations upon various issues like monetary policy, fiscal framework and agricultural and social sector – subjects that fall under the domain and turf of Jaitley. will also work in co-operation and consultation of existing bodies and will be using resources of the Niti Ayog.
So, that brings up the question on what role Jaitley has in the months to come. He will just be an implementer of the Prime Minister’s policies and may not have a role in formulating policies.
Famous journalist and former economist with World Bank, Arun Shourie, labelled the NDA government of being run by two-and-a-half men — Modi, Amit Shah and Arun Jaitley (the half part). He ridiculed Amit Shah as a “famous economist”, accused Modi of ruling by “revelation” (ilhaam) — which probably explains the financial setbacks and the role of Jaitley as a cross-bearer.