Amit Mitra, principal chief adviser to Bengal chief minister Mamata Banerjee and the state finance department, on Monday raised three economic concerns — a mix of high inflation and unemployment, lack of demand stimulating measures and a broken supply chain leading to big companies following vertical integration.

“We rarely in history see both inflation and unemployment rising simultaneously. This is in violation of what we the students of economics call the Phillips curve. Today the wholesale price inflation is 14.2 per cent and at the same time the growth of unemployment year on year is 10.48 per cent.

“This was seen in the 1970s when I was a student in the United States due to the Oil Shock. What worries me is that we are heading towards a stagflation,” Mitra said at an event organised by the Institute of Cost Accountants of India.

He also referred to the Union finance minister Nirmala Sitharaman pulling up government ministries on sluggish capital expenditure but said the spend on this head alone is not adequate to create excess demand.

“The Union finance minister, my good friend, because she chairs the GST Council and I am a vocal member, herself admitted two days ago that private investment is not taking place. She sent out a notice to all the departments who have not done enough capital expenditure. My humble submission is capital expenditure to create infrastructure has a time lag. There is a need to create excess demand right now,” Mitra said.

“Bengal has put money in the hands of the people directly which immediately creates demand. We have also started supply side stimulation which creates demand. We lowered the stamp duty on registration by 2 per cent and we also reduced the circle rates by 10 per cent. Immediately our real estate industry has picked up.”

He also referred to supply chain concerns faced by big companies who depend on MSMEs who are struggling across the country. “Big companies, when they don’t get the supply from vendors, they start vertical integration. That means they start to do what vendors used to do,” he said.

Mitra also referred to the recently released World Inequality Report 2022. “What worries me is that the share of the bottom 50 per cent of the population is now down to 13 per cent of national income. Inequalities of this nature will lead to tensions in our democracy,” he said.