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The Department of Economic Affairs

The Department of Economic Affairs

The Department of Economic Affairs is the main agency for the Union Government to formulate and monitor the country's economic policy.

The Department of Economic Affairs is the focal agency for the Union government and is responsible for developing and monitoring national economic policies and programmes affecting domestic and international economic management. One of the department’s main responsibilities is to prepare and submit to Parliament the Union budget under the President and the executive branch within the Union territories. The Foreign Investment Promotion Board (FIPB) came under the Department of Economic Affairs of the Ministry of Finance and is an inter-ministerial body responsible for processing FDI proposals and making recommendations for government approval. FIPB had been abolished, as announced by Finance Minister (late) Arun Jaitley in the Lok Sabha’s Budget speech in 2017-2018.

Ajay Seth is the current secretary of the department.

Department of Economic Affairs, DEA

The Department of Economic Affairs (DEA) is in charge of economic policy as well as the development and filing of the Union budget, which includes the Railways, the budgets of Union territories that do not have legislatures and the budgets of states that are governed by the President. DEA also releases small savings plan interest rates and provides infrastructure status to specific industries. It maintains a website dedicated to PPPs, www.pppinindia.gov.in.

Organisations under/related to DEA

Constitutional Body: Art. 280: Finance Commission. DEA is associated with it.

Statutory Body: Board of Industrial and Financial Restructuring (BIFR) – which was abolished after the emergence of another statutory body – the Insolvency and Bankruptcy Board of India (IBBI) under the Ministry of Corporate Affairs.

The Chief Economic Adviser (CEA) is not a constitutional or statutory head. He/she works under DEA. CEA is responsible for preparing economic surveys and supervising the cadre of agents of the Indian Economic Services (IES).

Public Sector Undertaking: Secure Printing and Minting Corporation of India (SPMCIL), registered under the Companies Act, responsible for printing banknotes, coins, commemorative coins, checks, stamps, extra-legal stamps, passports/visas and other travel documents, etc.

Financial Stability Development Council (FSDC): Neither a constitutional nor a statutory body. FM is the chairman. Members include the heads of all financial regulators such as RBI, SEBI, IRDAI, etc. and the head of the Insolvency and Bankruptcy Board of India (IBBI), a statutory body under the Ministry of Commerce.

History of Economic Thought

The history of economic thought involves thinkers and theories in the field of political economy and economics. Economics was not considered a separate profession until the 19th century. In his writings on politics and ethics, ancient Greek philosopher Aristotle explored the “art” of acquiring wealth and whether the property was best being private or public. In the Middle Ages, scholars like Thomas Aquinas believed that it was a moral duty for companies to sell their goods at fair prices. Economic thought developed from mediaeval feudalism to the mercantilist theory of the Renaissance, when people were concerned with shifting trade policy toward national interests. Adam Smith’s modern political economy emerged during the Industrial Revolution, when technological advances, global exploration, and previously unimaginable material prosperity became a reality.

Keynesianism (20th century)

During the Great Depression, John Maynard Keynes published his most important book, The General Theory of Employment, Interest, and Money (1936). The Great Depression was sparked by the stock market crash of 1929, which led to a sharp rise in U.S. unemployment, causing European borrowers to repay their debts, and having a knock-on effect on the global economy. Orthodox economy calls for tighter spending until business confidence and profitability levels are restored. On the other hand, Keynes pointed out in A Tract on Monetary Reform (1923) that multiple factors determine economic activity, and it is not enough to simply wait for the long-term market equilibrium to recover.

At Bretton Woods, Keynes helped formulate the IMF, World Bank, and International Trade Organisation’s plans to stabilise the global economic volatility of the 1920s and ensure a fair world of trade. world. Although Keynes died more than a year later, his ideas had shaped the new world economic order, with all Western governments following a Keynesian recipe for deficit spending to avoid crises and maintain full employment.

Neoclassical Synthesis

After World War II and the death of John Maynard Keynes, the work of a group of mainly American economists combined Keynes’s economic theory with a mathematical representation of statistical methods. The development of this new orthodoxy is known as the neoclassical synthesis. The theory was proposed by John Hicks and popularised by mathematician-economist Paul Samuelson, who appears to have coined the term and helped spread “synthesis”, in part by his technical writings and his influential textbook, Economics (1948).

Mainstream economics in the second half of the 20th century was dominated by synthesis, mainly Keynesianism, in macroeconomics and neoclassicism in microeconomics (Clark 1998). The Introduction to College Economics course begins with the same approach, bringing together different streams of economic thought and presenting economic theory as a unified whole.

Conclusion

The Department of Economic Affairs is the focal point for the Central government under the Ministry of Finance, and its role is to formulate and monitor macroeconomic policies, including matters related to fiscal policy and public finances, inflation, government debt management and government operations, capital markets, including stock exchanges. In this regard, it examines ways and means to mobilise internal resources through taxation, market lending and mobilisation of small savings; monitoring and mobilising external resources through multilateral and bilateral official development assistance, foreign government loans, foreign investment and monitoring of foreign exchange resources, including the balance of payments; production of banknotes and coins of various denominations, postal stationery, stamps; Indian Economic Services (IES) executive management, career planning and training.