The Congress on Tuesday said 2020-21 had become the “darkest year of the economy” in four decades because Prime Minister Narendra Modi refused to pay heed to good advice and the global experience of management during the time of pandemic and lockdown.
Former finance minister and Congress veteran P. Chidambaram said: “The current state of the economy is no doubt largely due to the impact of the pandemic, but it has been compounded by the ineptitude and incompetent economic management of the government. Good advice by distinguished economists and renowned institutions has been rebuffed. Worldwide experience has been ignored. Suggestions on fiscal expansion and cash transfers have been turned down. Hollow packages like Atmanirbhar have fallen flat.”
Lamenting that the government didn’t take the required steps last year, the former finance minister said the country could not afford to lose another year, adding, “fortunately, we are only at the beginning of this year. But if you don’t take the steps we are advocating, things will not get better. If you do nothing, it will be a disaster. Take steps now. Don’t worry about the fiscal deficit. It doesn’t make any difference. Print money if needed. But spend. Spend on health, on welfare, on infrastructure. The purpose is to revive the economy”.
He added: “We are glad that the two leading chambers of business and industry — CII and Ficci — have, in the last few days, echoed our views and pleaded for fiscal expansion, including cash transfers to the poor.
“The RBI’s monthly review has flagged the ‘demand shock’ and its consequences. The Centre for Monitoring Indian Economy (CMIE) report on loss of jobs and growing unemployment is alarming. The research and survey reports of Aziz Premji University have concluded that 23 crore people have been pushed below the poverty line and into indebtedness. Yet, even as recently as yesterday (Monday) morning, the finance minister gave a long interview to some newspapers defending her misguided and disastrous policies.”
Chidambaram was addressing the media on the provisional estimates of Annual National Income for 2020-21 released by National Statistical Office on Monday.
“As expected, the GDP at constant prices recorded a negative growth of minus 7.3 per cent, the first time India has recorded negative annual growth since 1979-80. Three numbers of GDP at constant prices will highlight the parlous state of the economy: 2018-19: Rs 140,03,316 crore; 2019-20: Rs 145,69,268 crore; 2020-21: Rs 135,12,740 crore. The increase in 2019-20 was modest at 4.0 per cent, but the decline in 2020-21 was severe at minus 7.3 per cent. The net result is that the GDP in 2020-21 is lower than the GDP of two years ago (2018-19).”
Recalling that the finance minister and her chief economic adviser began to sell the story of a recovery when the first wave of the pandemic appeared to subside last
year, he said: “They saw ‘green shoots’ when no one else did. They predicted a V-shaped recovery. It was a false story and we had expressed our strong reservations and warned there were no signs of a recovery. We had pointed out that what the economy needed was a strong dose of stimulus, including increased government expenditure, direct transfers of cash to the poor and liberal distribution of free rations. Our pleas fell on deaf ears, and the result is a negative growth of minus 7.3 per cent.”
He obliquely questioned the credentials of chief economic adviser K. Subramanian by saying that nobody he knows takes him seriously.
Arguing that the deeply worrying conclusion is that most Indians are poorer than they were two years ago, the Congress leader said: “What is most worrying is that the per capita GDP has fallen below Rs 1 lakh, to Rs 99,694. In percentage terms it is a decline of minus 8.2 per cent over the previous year. It is lower than the level achieved in 2018-19 (and maybe even 2017-18). The NSO reveals that most economic indicators are worse than what they were two years ago. Examples are: private consumption, gross fixed capital formation (GFCF), exports, imports.”
Accusing Modi of wiping out the gains of the Manmohan Singh government in lifting millions of people out of poverty, he said: “This government is insensitive, not concerned about what is happening to the lower middle class and the poor. The very rich have become richer over the last year. The upper middle class is secure behind gated communities. The lower middle class have become poor and the poor are pushed below poverty line.”