Ajay Seth, a 1987-batch Karnataka cadre officer of the Indian Administrative Service (IAS), on Friday took charge as economic affairs secretary. His appointment comes at a crucial time when India is witnessing the second wave of Covid-19 pandemic that is threatening to slow down economic recovery.
Seth, who was previously the managing director of Bangalore Metro Rail Corporation Limited, will now be responsible for the execution of the government’s efforts to insulate the economy from the adverse impact of the second Covid-19 wave.
The new economic affairs secretary will coordinate the policy efforts of various arms of the government, the central bank and states to ensure that the projected growth path of the economic recovery is maintained, one official said, requesting anonymity. Although there is unlikely to be a nationwide lockdown during the second wave, local and state-level lockdowns, particularly in economic hubs such as Maharashtra, will adversely impact the economy.
India’s economy shrank by 24.4% in the first quarter of 2020-21, which bore the brunt of a 68-day lockdown imposed to slow the spread of coronavirus disease, and 7.3% in the second, before entering growth territory and expanding by 0.4% in the last three months of 2020 (ending December 31). Overall, it is expected that the economy will contract by 8% in 2020-21. According to an estimate of the Reserve Bank of India, the economy is expected to grow at 10.5% in 2021-22, with a quarterly path of 26.2% in Q1, 8.3% in Q2, 5.4% in Q3, and 6.2% in Q4.
Seth is expected to take stock of sectors that will be adversely affected due to the second wave of the pandemic and help the government in framing both fiscal and monetary policies to boost growth, the person mentioned above said.
The economic affairs secretary plays a crucial role in the country’s monetary and market-related policies as he is the bridge between the Union government and regulators such as RBI and the Securities and Exchange Board of India (Sebi).
The department of expenditure (DEA), one of the five arms of the Union finance ministry, is the nodal department for the execution of the government’s efforts to boost the economy, implement policies to enhance domestic and international investments, and prepared budget-related proposals.
In a bureaucratic reshuffle last week, DEA secretary Tarun Bajaj was made the new revenue secretary, while Seth was brought in from his home cadre to manage economic affairs.