The newly set-up Prime Minister's Economic Advisory Council (PMEAC) on Wednesday warned against deviating from the fiscal consolidation path.
The warning comes as the government is considering a stimulus package to kick-start a stuttering economy.
In its first-ever meeting, PMEAC Chairman Bibek Debroy said: “The fiscal consolidation exercise should not be deviated from.”
The PMEAC is the second high-level body which has advised against a stimulus.
Last week, RBI Governor Urijit Patel said the government should be very cautious in its fiscal actions at the moment when the combined deficit of Centre and states has reached 6%.
Debroy said there was a consensus amongst the members of the PMEAC that the economy had slowed down but declined to comment whether demonetisation or GST were the reasons behind it.
He outlined 10 priority areas on which the PMEAC will focus in the coming months.
These are economic growth, fiscal framework, employment and job creation, monetary framework, public expenditure, institutions of economic governance, agriculture and animal husbandry, informal sector and its integration with formal sector.
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 PMEAC will independently advise the prime minister on economic policies.
Since the presentation of the Union Budget is around the corner, in the next few months, the council's focus will also be on guidance to the preparation of the Budget.
The council will, however, be embedded in Niti Aayog and will help take its agenda forward.
